INDUSTRY
No ITC on GST paid on input services by life, health insurers, CBIC clarifies
- IBJ Bureau
- Sep 17, 2025
The Central Board of Indirect Taxes and Customs (CBIC) has issued a set of frequently-asked questions (FAQs) on the nitty-gritty of the newly-restructured Goods and Services Tax (GST). The FAQs clarify on taxation of various goods and services when the restructured tax system becomes effective on September 22.
Some of these clarifications pertain to insurance companies, since the GST Council has exempted premium on individual health and life insurance policies from GST in its September 3 meeting. Previously, these came under the 18 per cent tax slab.
The CBIC has clarified that insurance companies will not be able to claim input tax credit (ITC) on GST paid on inputs like commissions and brokerages for individual health and life insurance policies.
“Out of these input services, reinsurance services will be exempted. Input Tax Credit of other inputs or input services is to be reversed because the output services will be exempted," the CBIC said.
Additionally, the indirect tax body has added that services of individual health and life insurance business provided by insurers to the insured, except for group insurance, are included within the ambit of the exemption.
“When these services are provided to an individual or to an individual with his or her family, the same will be exempted,” it has added.
According to the FAQs, businesses which are in the 5 per cent slab without the ITC will not be able to claim credit on the taxes paid on input of such goods and services.
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