The upcoming meeting of the Goods and Services Tax (GST) Council of India will focus on the impact of GST on co-insurance and reinsurance.The discussion stems from a recommendation made by the fitment committee, as disclosed by a senior government official to Moneycontrol. The goal is to tackle industry practices that have led to GST non-compliance and provide clearer guidelines.
Recent investigations by GST authorities have uncovered instances of tax evasion in insurance companies due to excessive commissions, co-insurance, and reinsurance agreements. The companies involved have been sent formal notices.
After a review by the fitment committee, the GST Council will address industry concerns regarding insurance practices.Stakeholder feedback submitted to GST authorities will be discussed in a meeting anticipated to take place before the end of March.
Insurers Receive GST Notices
LIC was served a GST notice amounting to Rs 806.3 crore for the fiscal year 2017-18, citing compliance issues, including incorrect tax credit reversal related to reinsurance.Star Health and Allied Insurance faced a GST demand of Rs 38.99 crore in 2023 for failing to comply with premiums collected under co-insurance agreements from July 2017 to March 2023.
ICICI Lombard General Insurance received a notice for approximately Rs 1,730 crore in unpaid GST from July 2017 to March 2022, linked to non-payment of GST on co-insurance and reinsurance premiums.
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