Clarification on taxability of wreck and salvage values in motor insurance claims

Last updated: 27 June 2024

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Quick Summary

This notification clarifies the Goods and Services Tax (GST) treatment for salvage or wreck values in motor insurance claims. It addresses queries from the trade and tax authorities regarding whether insurance companies need to pay GST on the salvage/wreckage value when assessing damages to insured motor vehicles. The clarification covers both total loss and partial loss situations.

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 the taxability of salvage or wreck values in motor insurance claims under GST.

It is addressed to the Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/Commissioners of Central Tax and Principal Directors General/Directors General.

The damages are classified into Total Loss/Constructive Total Loss or Cash Loss, and Partial Loss.

The clarification concerns the salvage/wreckage value earmarked in the claim assessment for damages to a motor vehicle.

Yes, representations have been received from the trade and field formations seeking this clarification.