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GST on life insurance agency under RCM

CA Nitin K. Varshney (FCA DISA CCA Peer Reviewer (ICAI)) (616 Points)

09 August 2021

a life insurance company is deducting 11% GST & 5% TDS at the time of payment of insurance commission to agent. GST is payable to the company under RCM and company says they will charge 11% from agent and 7% will be born by company. whether it is correct action by the company, when they will be allowed full amount of GST as ITC? what are the implication of GST on Life Insurance companies?

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2 Replies

Amit Maity (63 Points)
Replied 09 August 2021

Sir, I think it has not correct action taken by the co.
Under RCM co will issue invoice and then payment by his own pocket as output and lateron it will be adjusted full input and output and liability become zero, in this case it will be disallowed.

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prasad Nilugal (3924 Points)
Replied 10 August 2021

1) Inform GST department in writing about company not paying full amount under RCM
2) Life and Health insurance input tax credit not available , it's block credit under section 17 (5) of the CGST act .