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TMI BlogClarification on taxability of salvage/ wreck value earmarked in the claim assessment of the damage caused to the motor vehicle.X X X X Extracts X X X X X X X X Extracts X X X X ..... licyholders. Such damages to the insured vehicle are classified in two categories: i. Total Loss/ Constructive Total Loss or Cash Loss; and ii. Partial Loss Situation 1.1 Representations have been received from the trade and field formations seeking clarification as to whether in case of motor vehicle insurance, GST is payable by the insurance company on salvage/ wreckage value earmarked in the claim assessment of the damage caused to the motor vehicle. 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 WBGST Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed is limited to Insured‟s Declared Value (IDV) of the vehicle less the value of salvage/ wreck in cases of total loss to the vehicle, if the insurance claim is settled by the insurance company as per the terms of the insurance contract by deducting value of salvage/ wreckage from the claim settlement amount, the salvage/ wreckage does not become property of insurance company, and the ownership for such wreckage/ salvage remains with the insured. However, in some cases, the insurance company may support sourcing of competitive quotes from various salvage/ wreckage buyers and the insured may select the best available offer for sale of wreckage or damaged car. The insured may also source quotes from open markets and dispose the wreckage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty of insured and insurance companies are not liable to discharge GST liability on the same. However, in cases, where the insurance claim is settled on full claim amount, without deduction of value of salvage/ wreckage (as per the terms of the contract), the salvage becomes the property of the insurance company and the insurance company will be obligated to discharge GST on supply of salvage to the salvage buyer. 3. Difficulty, if any, in implementation of this trade circular may please be brought to the notice of the Commissioner. Sd/- (DEVI PRASAD KARANAM, IAS) Commissioner, State Tax West Bengal - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax Management India - taxmanagementindia - taxmanagement - taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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