Exemption in relation to Insurance sector [ Entry no. 28,29,29A,29B,35,36,36A,40 ] - GST Ready Reckoner - GST

Exemption in relation to Life /General Insurance Sector Exemption Entry 28 Services of life insurance business provided by way of annuity under the National Pension System (NPS) regulated by Pension Fund Regulatory and Development Authority of India (PFRDA) under the Pension Fund Regulatory and Development Authority Act, 2013 is exempt under GST. Scope The scope of the exemption is subject to some restrictions which can be easily understood from the below table: Who is eligible What specifically is exempt Limits for exemption Services provided by life insurance entities The service of life insurance business provided by way of annuity under the National Pension System regulated by Pension Fund Regulatory and Development Authority (PFRDA) of India is exempt from GST. The premium received by such life insurance companies under the National Pension System was exempt from Services Tax w.e.f. 1st April, 2016. The same benefits are also provided under GST The premium received by life insurance companies under the National Pension System regulated by Pension Fund Regulatory and Development Authority (PFRDA) of India is exempt. Example: R Ltd an insurance company provides life insurance business to its clients; such services shall be exempt if the company is under the National Pension System regulated by Pension Fund Regulatory and Development Authority (PFRDA) of India. Exemption Entry 29 Services of life insurance business provided or agreed to be provided by the Army, Naval and Air Force Group Insurance Funds to members of the Army, Navy and Air Force , respectively, under the Group Insurance Schemes of the Central Government is exempt under GST. Exemption Entry 29A Services of life insurance provided or agreed to be provided by the Naval Group Insurance Fund to the personnel of Coast Guard under the Group Insurance Schemes of the Central Government. Exemption Entry 29B Services of life insurance provided or agreed to be provided by the Central Armed Police Forces (under Ministry of Home Affairs) Group Insurance Funds to their members under the Group Insurance Schemes of the concerned Central Armed Police Force. Example Raju an officer of the Indian Navy has been provided life insurance services by the Army, Naval and Air Force Group Insurance. Such services shall be exempt. Exemption Entry 35 Services of general insurance business provided under following schemes is exempt under GST. Hut Insurance Scheme; Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as Integrated Rural Development Programme); Scheme for Insurance of Tribals; Janata Personal Accident Policy and Gramin Accident Policy; Group Personal Accident Policy for Self-Employed Women; Agricultural Pumpset and Failed Well Insurance; Premia collected on export credit insurance; Restructured Weather Based Crop Insurance Scheme (RWCIS)] or the Modified National Agricultural Insurance Scheme, approved by the Government of India and implemented by the Ministry of Agriculture; Jan Arogya Bima Policy; Pradhan Mantri Fasal Bima Yojana (PMFBY); Pilot Scheme on Seed Crop Insurance; Central Sector Scheme on Cattle Insurance;(m) Universal Health Insurance Scheme; Rashtriya Swasthya Bima Yojana; Coconut Palm Insurance Scheme; Pradhan Mantri Suraksha BimaYojna; Niramaya Health Insurance Scheme implemented by the Trust constituted under the provisions of the National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999. Example Rakesh has provided services of general insurance business under Hut Insurance Scheme; this is exempt. Exemption entry 36 Services of life insurance business provided under following schemes is exempt under GST. Janashree Bima Yojana; Aam Aadmi Bima Yojana; Life micro-insurance product as approved by the IRDA, having maximum amount of cover of 2 lakh; Varishtha Pension Bima Yojana; Pradhan Mantri Jeevan Jyoti Bima Yojana; Pradhan Mantri Jan Dhan Yogana; Pradhan Mantri Vaya Vandan Yojana Example Rohan has provided services of life insurance business under Janashree Bima Yojana; such services shall be exempt. Exemption Entry 36A Services by way of reinsurance of the insurance schemes specified in Entry number 35 or 36 or 40. Clarification 6. GST liability on the reinsurance of specified general and life insurance schemes. [ Circular No. 228 /2 2/2024-GST dated 15/07/2024 ] 6.1 Representations have been received to either exempt or regularize the GST liability, for the period from 01.07.2017 to 24.01.2018, on reinsurance of specified general insurance and life insurance schemes, which are exempt from GST. 6.2 Certain specified general insurance and life insurance schemes are exempt from GST under SI. Nos. 35 and 36 of notification No. 12/2017-CT(R) dated 28.06.2017 . Vide entry at SI. No. 36A of the said notification, reinsurance of the aforesaid exempted insurance schemes has also been exempted w.e.f. 25.01.2018. 6.3 GST Council in its 53rd meeting held on 22nd June, 2024 has recommended to regularize the GST liability on such reinsurance of exempt general insurance and life insurance schemes for the past period, i.e. from 01.07.2017 to 24.01.2018, on 'as is where is' basis. 6.4 Thus, as recommended by the GST Council, GST liability on the services by way of reinsurance of the insurance schemes specified in SI. Nos. 35 and 36 of notification No. 12/2017-CT(R) dated 28.06.2017 is regularized for the period from 01.07.2017 to 24.01.2018 on 'as is where is' basis. 8. Applicability of GST on retrocession services. [ Circular No. 228 /2 2/2024-GST dated 15/07/2024 ] 8.1 Representations have been received to clarify whether the term 'reinsurance' as mentioned in SI. No. 36A of notification No. 12/2017-CT(R) dated 28.06.2017 includes 'retrocession'. 8.2 The matter was placed before the GST Council in its 53rd meeting held on 22nd June, 2024 . As per the IRDAI (Re-insurance) Regulations, 2018, 'Retrocession' means a re-insurance transaction whereby a part of assumed reinsured risk is further ceded to another Indian Insurer or a CBR (Cross Border Re-insurer). Accordingly, the GST Council has recommended to clarify that reinsurance includes retrocession services. 8.3 Thus, as recommended by the GST Council, it is hereby clarified that the term 'reinsurance' as mentioned in SI. No. 36A of notification No. 12/2017-CT(R) dated 28.06.2017 includes 'retrocession' services. Exemption Entry 40 Services provided to the Central Government, State Government, Union territory under any insurance scheme for which total premium is paid by the Central Government, State Government, Union territory. Clarification 7. GST liability on the reinsurance of insurance schemes for which total premium is paid by the Government. [ Circular No. 228 /2 2/2024-GST dated 15/07/2024 ] 7.1 Representations have been received to exempt GST, for the period from 01.07.2017 to 26.07.2018, on reinsurance of those insurance schemes for which total premium is paid by the Government. 7.2 Services provided to the Central Government, State Government, or Union Territory under any insurance scheme for which total premium is paid by the Central Government, State Government, or Union Territory are exempt from GST under SI. No. 40 of notification No. 12/2017-CT(R) dated 28.06.2017 . Vide entry at SI. No. 36A of the said notification, re-insurance of the aforesaid insurance schemes has been prospectively exempted w.e.f. 27.07.2018. 7.3 GST Council in its 53rd meeting held on 22nd June, 2024 has recommended to regularize the GST liability on such reinsurance of Government sponsored insurance schemes for the past period, i.e. from 01.07.2017 to 26.07.2018, on 'as is where is' basis. 7.4 Thus, as recommended by the GST Council, GST liability on the services by way of reinsurance of insurance services covered under SI. No. 40 of notification No. 12/2017-CT(R) dated 28.06.2017 is regularized for the period from 01.07.2017 to 26.07.2018 on 'as is where is' basis. As per Notification No. 12/2017-Central Tax (rate) dated 28.06.2017 define the following terms: As per para 2(zj) insurance company means a company carrying on life insurance business or general insurance business; As per para 2(zo) life micro-insurance product shall have the same meaning as assigned to it in clause (e) of regulation 2 of the Insurance Regulatory and Development Authority (Micro-insurance) Regulations, 2005; As per para 2(zn) life insurance business has the same meaning as assigned to it in clause (11) of section 2 of the Insurance Act, 1938; As per para 2(zo) life micro-insurance product shall have the same meaning as assigned to it in clause (e) of regulation 2 of the Insurance Regulatory and Development Authority (Micro-insurance) Regulations, 2005; As per para (zb) general insurance business has the same meaning as assigned to it in clause (g) of section 3 of the General Insurance Business (Nationalisation) Act, 1972;