Clarification on ITC Reversal Requirement for Non-Taxable Portion of Life Insurance Premiums

Last updated: 27 June 2024

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This notification clarifies the requirement for reversing input tax credit (ITC) on the portion of life insurance premiums that are not subject to tax under Rule 32(4) of the CGST Rules, 2017. It addresses queries from the trade and tax authorities regarding whether this non-taxable portion is considered an exempt or non-taxable supply, and if ITC availed on it needs to be reversed. The Central Board of Indirect Taxes and Customs (CBIC) issues this clarification to ensure consistent application of GST law.

F.No. CBIC-20001/4/2024-GST Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs GST Policy Wing ***** North Block, New Delhi Dated the 26th June, 2024 To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissio

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FAQ :

The notification clarifies whether the non-taxable portion of life insurance premiums, as per Rule 32(4) of the CGST Rules, 2017, is considered an exempt supply and if input tax credit (ITC) availed on it needs to be reversed.

This clarification is intended for Principal Chief Commissioners, Chief Commissioners, Principal Commissioners, Commissioners of Central Tax, and Principal Directors General/Directors General.

Rule 32(4) of the Central Goods and Services Tax Rules, 2017 (CGST Rules) is mentioned, which applies to life insurance business and determines the taxable value of premiums.

The purpose is to clarify the requirement of ITC reversal for the non-taxable portion of life insurance premiums and to ensure uniform implementation of GST law across all field formations.

The notification was issued by the Central Board of Indirect Taxes and Customs (CBIC), under the Ministry of Finance (Department of Revenue), Government of India.