Through the Circular No. 244/01/2025-GST, the Central Board of Indirect Taxes & Customs (CBIC) regularised the payment of GST on co insurance premium apportioned by the lead insurer to the co-insurer and on ceding /re-insurance commission deducted from the reinsurance premium paid by the insurer to the reinsurer.
The circular was issued using the authority granted by section 168(1) of the Central Goods and Services Tax Act, 2017 and the suggestions made by the GST Council at its 53rd meeting, which was held in New Delhi on June 22, 2024.
Co-Insurance Premiums and Reinsurance Commissions Not Taxable following Inclusion of Items 9 and 10 in Schedule III of CGST Act: Madras HC
Some activities and transactions were added to Schedule III of the CGST Act, 2017 as activities or transactions that will not be regarded as a supply of goods or services, based on the recommendations of the 53rd meeting of the GST Council, which was held in New Delhi on June 22, 2024.
The activity of apportionment of co-insurance premium by the lead insurer to the co-insurer for the insurance services jointly supplied by the lead insurer and the co-insurer to the insured in co-insurance agreements, subject to the condition that the lead insurer pays the Central tax, the State tax, the Union territory tax and the integrated tax on the entire amount of premium paid by the insured are not treated as a supply nor as a supply of services.
Services by insurer to the reinsurer for which ceding commission or the reinsurance commission is deducted from reinsurance premium paid by the insurer to the reinsurer, subject to the condition that the Central tax, the State tax, the Union territory tax and the integrated tax is paid by the reinsurer on the gross reinsurance premium payable by the insurer to the reinsurer, inclusive of the said ceding commission or the reinsurance commission.
The above provisions were enacted vide Finance (No. 2) Act, 2024 and have been brought into force on 01.11.2024 vide Notification No. 17/2024-Central Tax dated 27.09.2024. In its 53rd meeting, the GST Council further recommended that the payment of GST on the activities or transactions, as specified in paragraph 2 above, may be regularized for the past period, i.e. from 01.07.2017 to the effective date of amendments in the CGST Act, , on ‘as is where is’ basis. As recommended by the 53rd GST Council, the payment of GST on the activities or transactions specified in paragraph 2 above is regularized for the period 01.07.2017 to 31.10.2024, on ‘as is where is’ basis.
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