Insurers In order not to take advantage of ITC, compared to GST paid for the Commission for Individual Health, Life Policy

When health, life policy services are provided to an individual or to a person with his/her family, the same will be exempted | Photocredit: Getty images

Insurance companies do not receive input tax credit on committee or brokers for individual health and life insurance policies, said Central Board of Indirect Taxes & Custom (CBIC) Tuesday. It has also said that hotels with a room rate of less than £ 7,500 will not get ITC.

Insurers are currently using ITC on many inputs and input services such as committees, brokerage and reinsurance. “These input services will be exempted from these input services. Input tax credit from other inputs or entering services must be reversed because the exemption services will be exempt,” said CBIC in a series of frequently asked questions (FAQ). GST Council, at its meeting on 3 September, advised to alleviate individual life and health insurance together with Family Floater.

The board said that services of individual health and life insurance activities provided by insurers to the insured, where the insured person is not a group, are included in the work of the exemption. When these services are delivered to an individual or to a person with his/her family, the same will be exempt, it said.

Mandatory

For hotels, the board said that suppliers of hotel accommodation service where the value of a unit of accommodation is smaller than or equal to £ 7,500 per unit per day, GST must have to charge 5 percent without ITC. “It is a mandatory rate prescribed for such services, and the option to pay GST at the rate of 18 percent with ITC is not available for such units,” the board said.

When asked how a service provider ITC should deal with in cases where GST is due at a rate of 5 percent without ITC, the board said that the credit of input taxes charged on goods or services used exclusively when providing such services is not taken by the service provider. The credit of input tax that is charged on goods or services that are partially used for providing such services and partly for supplying other taxable supplies, is also reversed by the service provider as if the delivery is livable up to 5 percent without ITC an exempt delivery. Consequently, proportional ITC must be reversed by the service provider, it said.

Another question was about liability to pay GST for local services provided by E Commerce Operators (ECO). According to the board, provides services through local delivery through an ECO where the person who provides such services is not liable to register, then the liability is to pay GST on the ECO. The services of local delivery are taxable at 18 percent.

Rental service

With regard to the tax treatment for leasing or renting services without an operator, the board said that the majority of the leasing or rental services are taxed without an operator at the same rate of taxes applicable to the delivery of similar goods. No change is proposed in this respect. The tax rate on such services remains the same as the tax rate that applies to the delivery of similar goods. For example, if cars or machines are taxed at 18 percent, the rate of 18 percent applies to leasing or rent (without operator) of such cars or machines

Published on September 16, 2025