The Central Board of Indirect Taxes and Customs (CBIC) issued a clarification stating that insurers are not entitled to claim input tax credit (ITC) on GST paid for commissions on individual insurance policies. The ruling, effective from September 22, 2025, has significant implications for the insurance industry's cost structure.
Key Points: ITC on individual policy commissions is blocked under Section 17(5) of the CGST Act, as health and life insurance fall under personal consumption. However, ITC on reinsurance services remains available. The clarification ends a long-standing ambiguity for general and health insurers.
Sources: Times of India (September 16, 2025), CBIC Circular No. 242/2025