GST on No Claim Bonus
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We all these days opt for various insurance policies to protect our self from the unprecedented events like death, or any hospitalization etc. These events have major impact on individuals both emotionally as well as Financially.
Insurance companies now a days also provides various benefits to the insurance holders to keep their existing customers and also to attract new customer. One of these benefits is “No Claim bonus“.
In No claim bonus, insurance companies give some monitory benefit by reducing the insurance premium amount of those customer, who have not claimed any insurance amount against such policy during the policy period.
Now, no claim bonus is in the nature of discount which is deducted from premium amount for not claiming any insurance claim and question arises whether this benefit will gall under GST considering customer is agreeing to the obligation to refrain from the act of lodging insurance claims during the policy period falls under the definition of consideration, therefore, liable to GST.
CBIC consider this matter and issued a circular- vide circular number: 186/18/2022 dated 27.12.2022, where they have clarified that the act of not claiming any insurance claim and later insurance company gives no claim benefit is not liable to GST as there is no supply take place also there is no contractional obligation for the policy holder not to claim any insurance claim.
This is a general practice adopted across the Insurance sector; hence No claim bonus shall not be considered as Consideration for the supply provided by the policy holder to the insurance company.
I hope you might have gained some insight about GST on No claim bonus.
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