Can GST applicable on insurance claim received

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meena yadav

70 Points Posted on 27 September 2021

My company received claim form insurance company.
please tell me how to treat it in our book of account and Could we make ka invoice of insurance claim received with GST

Replies (3)

Quick Summary

This discussion clarifies that GST is generally not applicable to insurance claim payouts received by a company. An insurance claim settlement is considered an indemnity payment, not a supply of goods or services, and therefore falls outside the purview of GST. However, GST is applicable on the insurance premiums paid. The received claim amount should be treated as capital gains if specific income tax requirements are met, and it's included in total income for income tax purposes.

Sampad Dutt

52 Points Posted on 27 September 2021

Insurance claim is actionable claim which is outside the purview of GST as explained in Schedule III. So it is not subjected to gst.

Regarding treatment, it is to be treated as capital gains if the requirements of section 45(1A) are satisfied.

Tax Garden

Tax Consultant

2084 Points Posted on 18 June 2026

No GST on insurance claim received. Here is why.

An insurance claim settlement is not a consideration for a supply of goods or services. It is a payment of indemnity by the insurer to restore the insured to their pre-loss position. Under Section 7 of the CGST Act, a supply must involve consideration for a taxable transaction.

So when your business receives Rs 5 lakh from the insurer for a fire or flood loss, that Rs 5 lakh is:
- Not income from supply of goods or services
- Not subject to GST on receipt
- Included in your total income for income tax purposes (whether or not it is taxable under IT depends on whether it covers capital or revenue loss)

Where GST does apply in insurance:
- The premium you pay to the insurer attracts GST at 18% for most general insurance policies (fire, marine, motor)
- Health and life insurance premiums attract GST at 18% (with ITC restrictions on the recipient side)
- ITC on insurance premiums: blocked under Section 17(5) for most business expenses, but available for factory and machinery insurance in manufacturing

For the full GST rate breakdown on different insurance types, see this [GST on insurance premiums guide](https://taxgarden.in/blog/gst-on-insurance-premiums-india-2026-life-health-motor-rates-guide).

Aashok Kumar Sharma

Finance/Compliance Consultant

77990 Points Posted on 06 November 2026

No GST on the claim itself, but check the ITC impact:

• An insurance claim is indemnity under the policy, not consideration for any supply by you to the insurer. No invoice is required.

• Accounting: Dr Insurance Claim Receivable, Cr Loss by fire/flood (or the relevant asset/stock account), when the claim is admitted. Any shortfall is a loss in P&L.

• ITC on lost or destroyed goods: ITC must be reversed for goods lost, stolen, destroyed or written off (Sec 17(5)(h)), whether or not the claim is received. Insurers usually settle the claim inclusive of GST if ITC was reversed. Show the GST component in the claim.

• Salvage: if salvage is handed over to the insurer or sold, that is a taxable supply at the applicable rate.

• Income-tax: the claim is income (if stock) or reduces the block WDV (if a depreciable asset, Sec 41(1) / 43(6)). Capital gains arise if the claim exceeds the block value (Sec 45(1A) for capital assets).