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Circular No. 186/18/2022-GST
F. No. CBIC-20001/2/2022 - GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
*****
New Delhi, Dated the 27th December, 2022
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/
Commissioners of Central Tax (All)
The Principal Directors General/ Directors General (All)
Madam/Sir,
Subject: Clarification on various issue pertaining to GST-reg.
Representations have been received from the field formations seeking clarification on
certain issues with respect to –
i.
taxability of No Claim Bonus offered by Insurance companies;
ii.
applicability of e-invoicing w.r.t an entity.
2.
In order to clarify the issue and to ensure uniformity in the implementation of the
provisions of law across the field formations, the Board, in exercise of its powers conferred by
section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as
“CGST Act”), hereby clarifies the issues as under:
S. No.
Issue
Clarification
Taxability of No Claim Bonus offered by Insurance companies
1.
Whether the deduction on
account of No Claim Bonus
allowed
by
the
insurance
company from the insurance
premium
payable
by
the
insured, can be considered as
consideration for the supply
provided by the insured to the
insurance
company,
for
agreeing to the obligation to
As per practice prevailing in the insurance
sector, the insurance companies deduct No
Claim Bonus from the gross insurance premium
amount, when no claim is made by the insured
person during the previous insurance period(s).
The customer/ insured procures insurance policy
to indemnify himself from any loss/ injury as per
the terms of the policy, and is not under any
contractual obligation not to claim insurance
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refrain from the act of lodging
insurance claim during the
previous year(s)?
claim during any period covered under the
policy, in lieu of No Claim Bonus.
It is, therefore, clarified that there is no supply
provided by the insured to the insurance
company in form of agreeing to the obligation to
refrain from the act of lodging insurance claim
during the previous year(s) and No Claim Bonus
cannot be considered as a consideration for any
supply provided by the insured to the insurance
company.
2.
Whether No Claim Bonus
provided by the insurance
company to the insured can be
considered as an admissible
discount for the purpose of
determination
of
value
of
supply of insurance service
provided by the insurance
company to the insured?
As per clause (a) of sub-section (3) of section 15
of the CGST Act, value of supply shall not
include any discount which is given before or at
the time of supply if such discount has been duly
recorded in the invoice issued in respect of such
supply.
The insurance companies make the disclosure of
the fact of availability of discount in form of No
Claim Bonus, subject to certain conditions, to
the insured in the insurance policy document
itself and also provide the details of the no claim
Bonus in the invoices also. The pre-disclosure of
NCB amount in the policy documents and
specific mention of the discount in form of No
Claim Bonus in the invoice is in consonance
with the conditions laid down for deduction of
discount from the value of supply under clause
(a) of sub-section (3) of section 15 of the CGST
Act.
It is, therefore, clarified that No Claim Bonus
(NCB) is a permissible deduction under clause
(a) of sub-section (3) of section 15 of the CGST
Act for the purpose of calculation of value of
supply of the insurance services provided by the
insurance company to the insured. Accordingly,
where the deduction on account of No claim
bonus is provided in the invoice issued by the
insurer to the insured, GST shall be leviable on
actual insurance premium amount, payable by
the policy holders to the insurer, after deduction
of No Claim Bonus mentioned on the invoice.
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Clarification on applicability of e-invoicing w.r.t an entity
3.
Whether the exemption from
mandatory generation of e-
invoices
in
terms
of
Notification
No.
13/2020-
Central Tax, dated 21st March,
2020, as amended, is available
for the entity as whole, or
whether the same is available
only in respect of certain
supplies made by the said
entity?
In terms of Notification No. 13/2020-Central
Tax dated 21st March, 2020, as amended, certain
entities/sectors have been exempted from
mandatory generation of e-invoices as per sub-
rule (4) of rule 48 of Central Goods and Services
Tax Rules, 2017. It is hereby clarified that the
said exemption from generation of e-invoices is
for the entity as a whole and is not restricted by
the nature of supply being made by the said
entity.
Illustration: A Banking Company providing
banking services, may also be involved in
making supply of some goods, including
bullion. The said banking company is exempted
from mandatory issuance of e-invoice in terms
of Notification No. 13/2020-Central Tax, dated
21st March, 2020, as amended, for all supplies of
goods and services and thus, will not be required
to issue e-invoice with respect to any supply
made by it.
3.
It is requested that suitable trade notices may be issued to publicize the contents of this
Circular.
4.
Difficulty, if any, in implementation of this Circular may please be brought to the notice
of the Board. Hindi version would follow.
(Sanjay Mangal)
Principal Commissioner (GST)
