GST FAQ on Insurance Sector as released by CBIC

GST FAQ on Insurance Sector as released by CBIC :

CBIC has released Frequently Asked Questions on Banking, Insurance and Stock Brokers Sector.  These FAQ's are updated upto 27.12.2018. We have divided these FAQ's into three categories ie. Banking, Insurance and Stock Broker Sector for ease of understanding. Frequently Asked Questions [FAQ] on Insurance Sector as released by CBIC are given below:

GST FAQ on Insurance Sector as released by CBIC

Sr. No.	Question	Answer
1.	What is the location of the supplier of service for fund management charges in ULIP policies	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	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 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	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	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.
5.	What would be the time of supply of life insurance services	Insurance policies are contracts for indemnifying any loss suffered by the policyholder. The policyholder is required to pay a premium at the time of inception of the policy. Renewal premiums are required to be paid on periodical basis during the tenure of the policy. For renewal of the policies the policyholders are allowed grace period ranging from 15 days to 30 days in accordance with the IRDA (Protection of Policyholders Interests) Regulation, 2002. The time of supply of life insurance services to the policy holders would be as under:- New Policy At the time of issuance of the policy; Renewal of Policy The time of issuance of renewal notice for insurance premium; Other charges including ULIP charges At the time of levy or recovery of the charges from the policyholder.
6.	When service tax was paid on or before 30th June, 2017 for the services to be provided, but subsequently not provided, whether refund claim can be made under Section 142(5) of the CGST Act	Section 142(5) of the CGST Act, 2017 specifically provides for refund of tax paid under the Finance Act, 1994 in respect of services not provided. The same shall be disposed off in accordance with the provisions of the Chapter V of the Finance Act, 1994.
7.	Can the input tax credit of Krishi Kalyan Cess be carried forward	No. It is not permitted in terms of section 140(1) of the CGST Act, 2017 read with Rule 117(1) of the CGST Rules, 2017.
8.	In the case of group insurance policies, a Master Policy is issued; the beneficiaries of the Master Policy may be located in more than one State. In such cases, what will  be the place of supply of services	In the case of issuance of Master / Group Policy to a registered person where the premium charged is a single premium and not segregated based on the beneficiaries of the insurance policies, the place of supply for such policy will be the location of the registered person paying the premium.
9.	What is the time of supply of services for deposits and advances in cases of the recipient issuing a bank guarantee or making a deposit before assumption of risk and issuance of a policy	As per the proviso to Section 2(31) of the CGST Act, 2017, a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply. In case of advances, however, the time of supply is the time of receipt of advance as provided in section 13(2)(a) of the CGST Act, 2017.
10.	Whether ITC will be allowed on motor garage services used by insurance company for claim settlement	Yes, ITC will be allowed on services of motor garage used by an insurance company for claim settlement.
11.	Whether the service provided by the re-insurance company to an insurer will be treated as a supply	The service of re-insurance falls within the scope of supply, and is chargeable to GST.

GST FAQ on Banking Sector as released by CBIC

GST FAQ on Stock Brokers Sector as released by CBIC

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