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TMI BlogClarification on the requirement of reversal of input tax credit in respect of the portion of the premium for life insurance policies which is not included in taxable valueX X X X Extracts X X X X X X X X Extracts X X X X ..... to whether the amount of insurance premium, which is not included in the taxable value as per Rule 32(4) of West Bengal Goods and Services Tax Rules, 2017 (hereinafter referred to as the WBGST Rules ) applicable for life insurance business, will be treated as pertaining to an exempt supply/ non-taxable supply and whether the input tax credit availed in respect of such amount shall be required to be reversed or not. 2. In order to clarify the issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Commissioner, in exercise of his powers conferred by section 168 of the West Bengal Goods and Services Tax Act, 2017 (hereinafter referred to as the WBGST Act ), hereby clarifies the issues as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tever name called, which provides a component of investment and a component of insurance issued by an insurer referred to in clause (9) of this section. 2. Life insurance companies are providing service of insuring the life of the insured and in return, are charging consideration in the form of premium from the insured. A number of life insurance companies are providing policies which may consist of a component of investment in addition to the component for the risk cover of the life insurance and accordingly, in such cases, the premium charged also includes the component which is allocated for investment or saving on behalf of the policy holder. As per definition of Life insurance business provided in Section 2(11) of the Insurance Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 6 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the IGST Act ), and includes non-taxable supply. The said definition of exempt supply has the following three limbs: - (a) Supply of service which is nil rated; (b) Supply of service which is wholly exempted from tax under section 11 of WBGST Act or under Section 6 of IGST Act; or (c) Supply of service which is non- taxable supply. 2.2.1. Further, as per section 2(78) of WBGST Act, non-taxable supply means a supply of goods or services or both which is not leviable to tax under the WBGST Act or under the IGST Act. 2.2.2 It is mentioned that there is no doubt about taxability of supply of service of providing life insurance services by the insurance comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the WBGST Rules provides for reversal of input tax credit in certain scenarios. As per the said rule, only that input tax credit which attract the provisions of sub-section (1) and sub-section (2) of Section 17 of the WBGST Act needs to be determined and reversed thereof. Further, sub- section (1) and sub-section (2) of Section 17 of the WBGST Act restrict the amount of credit only in a case where the registered person uses the goods or services partly for business or other purposes or partly for making taxable supplies or exempt supplies. However, as discussed in Para 2.2.3 above, the portion of premium, which is not includible in taxable value of supply as per Rule 32(4) of WBGST Rules, cannot be considered as pertaining to an exempt sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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