Payment of GST on co-insurance premium apportioned by lead insurer to co-insurer 

No 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 – CBIC Circular

Circular No. 244/01/2025-GST

F. No. CBIC-190354/2/2025-TO(TRU-II)-CBEC
Government of India
Ministry of Finance
Department of Revenue (Tax Research Unit)

North Block, New Delhi
Dated the 28th of January, 2025 

To,  The  Principal  Chief  Commissioners/  Chief  Commissioners/  Principal  Commissioners/  Commissioners  of  Central  Tax  (All)  /  The  Principal  Director  Generals/  Director  Generals  (All)

Madam/Sir, 

Subject: Regularizing 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 – reg.

Based on the recommendations of the GST Council in its 53rd meeting held on 22nd June, 2024, at New Delhi, and in exercise of the powers conferred under section 168(1) of the Central Goods  and  Services  Tax  Act,  2017,  the  following  clarification is  being  issued  through  this  Circular:

2. On  the  recommendations  of  the  53rd meeting  of  the  GST  Council  held  in  New  Delhi  on  22nd June, 2024, the following activities or transactions were included in Schedule III of the CGST Act, 2017 as activities or transactions which shall be treated neither as a supply of goods nor as a supply of services:

(a) 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.

(b) 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,  ubject 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.

3. 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.

4. Thus, 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.

5. Difficulties, if any, in the implementation of this circular may be brought to the notice of the Board.

Yours sincerely

(Sachin Jain)
Joint Secretary, TRU-II

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