Bombay HC upholds GST requirement on coinsurance/reinsurance transactions

In a major relief to 13 insurance companies, the Bombay High Court has stayed over ₹10,000 crore worth of GST demands on coinsurance and reinsurance transactions.

A division bench of Justices GS Kulkarni and Aarti Sathe ordered an ad-interim stay on the impugned demand orders till the next hearing. The court was hearing a batch of petitions filed by Aditya Birla Health Insurance, Oriental Insurance, SBI General Insurance, IFFCO Tokyo General Insurance, Generali Central Insurance, Universal Sompo General Insurance, IndusInd General Insurance, Tata AIG General Insurance and Raheja QBE General Insurance.

The dispute centers on the levy of GST on coinsurance premiums and cedar commissions. The petitioners argued that the demands are contrary to circulars issued by the Central Board of Indirect Taxes and Customs (CBIC) on October 11, 2024 and January 28, 2025. These circulars, issued pursuant to a decision of the GST Council, excluded co-insurance premiums and waiver of provisions of GST and provided for regularization of earlier demands on an “as-is-where-is” basis.

The insurers also pointed out that identical demands had already been withdrawn by the tax authorities in Meerut, Delhi, Pune and Mumbai in accordance with the CBIC circulars, while the impugned orders took a contrary approach. Taking note of this, and with the GST Council involved in the matter, the Supreme Court directed the tax department to register the canceled orders.

Commenting on the ruling, Amit Maheshwari, Managing Partner at AKM Global, said the ad-interim stay comes at a critical time for the insurance industry, providing immediate relief from major GST demands that had cast a shadow over the business. He noted that the GST Council had already clarified the position on co-insurance premiums and cedar provisions, which was subsequently implemented through CBIC circulars.

“The order reinforces that such circular guidelines cannot be ignored during assessment proceedings,” Maheshwari said. He added that the delay would help preserve insurers’ cash flows and underlined the need for consistent application of CBIC circulars while the broader legal issues are examined on their merits.

Published on January 23, 2026