FAQs on Insurance Sector under GST

FAQs on Insurance Sector under GST

The CBIC has published the FAQs on different topics and sectors. Following are the FAQs on Insurance Sector under GST:-

1. What is the location of the supplier of service for fund management charges in ULIP policies?

Ans. The fund management charges are charges towards managing and administering the fund. These funds are managed by the Fund Management team. The location of the supplier of service for fund management charges shall be the location/office which manages the fund.

2. Whether commission paid to insurance agents shall be construed as supplies received under Section
9(3) of CGST Act, 2017? If yes, whether the Life Insurance Company can raise a consolidated invoice for such commission payments?

Ans. Sr. No. 7 of notification No. 13/2017-Central Tax (Rate), dated 28th June 2017 as amended covers supplies received from Insurance Agents and provides for the Insurance Company to pay GST on such supplies under Section 9(3) of the CGST Act, 2017. In such cases, the insurance company may issue the agent-wise consolidated invoice at the end of the month for the supply of services received during the month.

3. Whether insurance policies issued to Non-Resident Indians, where the premium is paid through the Non-Resident External Bank account, will be ‘export of services’? Would the insurance premiums be taxable in cases where the same is not received in convertible foreign exchange or from the NRE Accounts?

Ans. No. The amounts paid from the Non-Resident External Accounts are paid in Indian Rupees and are not received in convertible foreign exchange. Therefore, the conditions for export of services as provided under section 2(6) of IGST Act, 2017 are not satisfied. Life Insurance services in such cases would be treated as inter-State supplies and subject to GST.

4. Will the requirements of Letter of Undertaking or Bond be required to be complied with in the case of Life Insurance Premium where the conditions of export of services are satisfied before or at the time of supply of the Life Insurance Service?

Ans.Yes. As per Section 16(3) of the IGST Act, 2017, read with Rule 96A of the CGST Rules, 2017, an exporter is required to submit a Letter of Undertaking or Bond in case the export of service is made without payment of integrated tax.

Download The Full FAQs on Insurance Sector under GST: Insurance Sector