Providing professional services to the Clients to solicits the Insurance business either from
Providing professional services to the Clients to solicits the Insurance business either from
Business Organization or Individual
(which may or may not be registered under GST)
Providing Services to the Clients and pays the premium to the Insurer who is bearing the risk of Business Organization or Individual
Providing Services to the Clients and pays the premium to the Insurer who is bearing the risk of Business Organization or Individual
But the Remuneration is paid to the Insurance Broker out of the premium received by the Insurer.
Brokers without any Branch
Brokers without any Branch
Brokers with one or more Branches
As per Brokers Regulations, the Broker can place insurance business any where in India.
As per Brokers Regulations, the Broker can place insurance business any where in India.
If the broker place business within State where his HO is situated. The Insurer will pay CGST/SGST or UTGST to the broker on his remuneration
If the broker place business in other than home State , the Insurer will pay IGST
Suppose a Broker Office – Mumbai (Only)
Suppose a Broker Office – Mumbai (Only)
Only one GSTIN
Insurer will ask GSTIN on each Proposal
If insurance business is placed in Mumbai with any Insurer–CGST/SGST will be paid
If insurance business is placed out side Maharashtra say Delhi or Kolkatta - IGST will be paid by the Insurer .
Suppose a Broker HO Office – Mumbai Delhi and IRDA approved branches at Delhi, Chennai, Kolkatta.
Suppose a Broker HO Office – Mumbai Delhi and IRDA approved branches at Delhi, Chennai, Kolkatta.
In each State, the Broker Branch should have GSTIN
If two or more branches are in the same State –only one GSTIN is permissible and additional place of business may be added
While placing the business the GSTIN of the Broker’s office to be disclosed
While placing the business the GSTIN of the Broker’s office to be disclosed
Accordingly, the Insurer will book business in the name of that Broker’s Branch
EXAMPLE:
EXAMPLE:
A Broking house having HO at Mumbai (Maharashtra) and Branches at Delhi, WB and TN
If Mumbai Branch placed business at Delhi, the Insurer demand the GSTIN.
If Broker provides the GSTIN of Delhi- CGST/SGST.
If Broker provides the GSTIN of any Other branch- IGST will be payable
A separate GSTIN should be taken only for IRDA approved branches not otherwise
A separate GSTIN should be taken only for IRDA approved branches not otherwise
Every broker must maintain the record of insurance business transaction wise and Insurer branch wise
Similarly the transaction should be recorded broker branch wise also.
Bill may be raised based on the data of insurance business maintained by the Broker
Bill may be raised based on the data of insurance business maintained by the Broker
But there can be differences of the business placed by Brokers and booked by the Insurers i.e. Non issue of policy for the premium deposit in the last 3-4 days of the month, proposal not approved by the competent authority
The Broker may raise the invoice as per his record on each insurer branch wise.
The Broker may raise the invoice as per his record on each insurer branch wise.
Insurer may pay less brokerage based on the business booked etc.
If there is difference of invoice amount . The Insurer may not be able to get the Input Tax credit and may be debatable.
Necessary rectifications to be made in the returns.
Take the details of business booked by the Insurer and amount of brokerage to be paid.
Take the details of business booked by the Insurer and amount of brokerage to be paid.
The differences may be result into dispute at the time of filing of returns and higher amount of GST will have to be deposited.
Those brokers who are having multiple branches in different States kindly ensure the evenly distribution of the income and ITC otherwise excess of ITC in one State cannot be adjusted against the balance of other State even PAN is the same.
Those brokers who are having multiple branches in different States kindly ensure the evenly distribution of the income and ITC otherwise excess of ITC in one State cannot be adjusted against the balance of other State even PAN is the same.
Whether Insurer will pay GST on total Brokerage especially on endowment products.
Whether Insurer will pay GST on total Brokerage especially on endowment products.
Suppose total premium of first year on endowment policies = Rs 1000 crs
It includes Risk premium 25%= 250 crs
GST on 250 crs@ 18%= 45 crs Recd by Insurer
Brokerage on 1st yr premium = 400 crs
GST on above = Rs 72 crs
GST Recd by Insurer = 45 Crs
Whether Insurer will pay GST on total Brokerage especially on endowment products.
Whether Insurer will pay GST on total Brokerage especially on endowment products.
Suppose total premium of subsequent year on endowment policies = Rs 1000 crs
It includes Risk premium 12.5%= 125 crs
GST on 125 crs@ 18%= 22.5 crs
Brokerage on 2nd yr premium = 75 crs
GST on above = Rs 13.5 crs
GST Recd by Insurer = 22.5 Crs
1, No prescribed format,
1, No prescribed format,
2, Not necessarily to be generated from computer
3, Particulars of invoice
Name and address of the Insurer, GSTIN of the Remitter, Distinct invoice no., GSTIN of the Insured ,Invoice value, Rate and Amount of IGST or CGST/SGST or UTGST, Bank Particulars ,Code of services .
Format enclosed
By 10th of every following month for the services provided the invoice wise details to be uploaded on the portal of GST. The return is known as GST1R
By 10th of every following month for the services provided the invoice wise details to be uploaded on the portal of GST. The return is known as GST1R
By 15th of every following month GST2R can be seen under your GSTIN where in the list of services availed by you and credit available to you.
By 20th of every following month the details of the GST payable GSTR3
By 31st Dec of the following year – Annual Return GSTR 9
FORMATS OF RETURNS
FORMATS OF RETURNS
FORMATS FOR UPLOADING THE RETURNS
1) Reverse Charge Mechanism (RCM)
2) Input Tax Credit (ITC)
As per section 2(98) of CGST Act’2017, “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both
As per section 2(98) of CGST Act’2017, “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both
under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act;
The purpose of reverse charge is to increase tax compliance and tax revenues. Earlier, the government was unable to collect service tax from various unorganized sectors like goods, transport etc. Compliances and tax collections will be increased through this mechanism.
The purpose of reverse charge is to increase tax compliance and tax revenues. Earlier, the government was unable to collect service tax from various unorganized sectors like goods, transport etc. Compliances and tax collections will be increased through this mechanism.
A manpower supplier of Company ABC has provided services to a Company XYZ.
A manpower supplier of Company ABC has provided services to a Company XYZ.
Bill charged= Rs. 1,00,000 and Tax liability (assumption) = Rs. 18,000 (Rs. 1,00,000*18%)
Service provider Company ABC will send a bill of Rs. 1,00,000 mentioning that the service tax will be bear by the receiver.
So, Company XYZ will pay Rs. 1,00,000 to Company ABC and will deposit Rs. 15,000 to the Government.
Non-resident service provider
Non-resident service provider
Goods Transport Agencies
Legal service by an Advocate/ Firm of Advocates
Arbitral Tribunal
Sponsorship Services
Specified Services provided by Government or Local Authority to Business entity
Services of a director to a company
Insurance agent
Recovery Agent of Bank/FI/ NBFC
Transportation Services on Import
Permitting use of Copyright
Radio Taxi services to E-commerce aggregator (eg: Ola, Uber, etc.)
Every Registered person shall be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be in the course or furtherance of his business and the said amount shall be credited to the electronic credit register.
1, Purchase of stationery
2, Laptop/computer
3, Vehicle insurance premium subject to vehicle in the name of the firm as GSTIN
4, AMC of computer
5. Travelling expenses
6, Rent
7, Membership fees
8, Tax Paid under Reverse Charge Mechanism like Labor contractor,
Advocate fees etc
1, Petrol expenses
2, Purchase of vehicle
3, Food expenses
4, Taxi Charges
5, Health premium or Life insurance premium unless it is provided under any law (WC and EDLI ITC will be available )
At the time underwriting
At the time underwriting
At the time of claim
Provide GSTIN of the Proposer
Provide GSTIN of the Proposer
If HO and Plant at different locations and both locations are having different GSTIN
At which the GSTIN the policy is to be issued to avail ITC
Later on it will be difficult to modify the invoice
Not applicable will be mentioned
Not applicable will be mentioned
CGST/UTGST shall be applicable as 12(13) (b) the location of recipient of the service will be applicable.
If the RM/WIP/FG/Consumables is destroyed or lost, it will be considered as sold and whatever ITC is availed to be reversed
If the RM/WIP/FG/Consumables is destroyed or lost, it will be considered as sold and whatever ITC is availed to be reversed
Whether GST is payable along with the claim amount ?
Advisory: Sum Insured should be inclusive of GST
Capital Goods: Under GST the life of Capital Goods is considered 5 years. If it is sold /destroyed within 5 years, the GST is to reversed for the remaining period.
Capital Goods: Under GST the life of Capital Goods is considered 5 years. If it is sold /destroyed within 5 years, the GST is to reversed for the remaining period.
5 years means 20% depreciation per annum
If the assets is sold /destroys after 2 years , the proportionate GST say 60% will be reversed on qtly basis
Transporter is eligible for ITC on purchase of new vehicle
Transporter is eligible for ITC on purchase of new vehicle
Question : What should be the IDV?
Purchase price less 5% or
(Purchase price less GST) less 5%`
On partial loss ITC is available- GST will not be payable
Total Loss : GST payable to the extent the GST is to be reversed subject to limited to IDV
Outward Reinsurance Business : Indian reinsurance business is either placed within India or outside India
Outward Reinsurance Business : Indian reinsurance business is either placed within India or outside India
Inward Reinsurance Business: Reinsurance business is being brought from India or Abroad
Reinsurance brokers deal with Insurers and Reinsurers situated in India and abroad.
Reinsurance brokers deal with Insurers and Reinsurers situated in India and abroad.
The service is provided to Insurers situated in India or abroad but the premium is paid to Reinsurers who pay the remuneration to the brokers.
Further as per Insurance Brokers Regulations, the reinsurance premium can be collected by brokers before it is remitted to Reinsurers after deducting remuneration from the premium amount.
Both Insurer and Reinsurer are based in India:
Both Insurer and Reinsurer are based in India:
The insurance premium including remuneration collected from Insurer will attract IGST or CGST and SGST depending on the location of the Broker and Insurer.
On remitting the premium to Reinsurer again it will attract GST
Under this situation, the premium will be paid by the Insurer to the Reinsurer Broker or directly remitted to Reinsurer in FE.
Under this situation, the premium will be paid by the Insurer to the Reinsurer Broker or directly remitted to Reinsurer in FE.
If directly remitted to Reinsurer being a non taxable person in India, the Insurer will have to deposit IGST under Reverse Charge Mechanism (RCM) and avail ITC of the tax deposited.
The IGST or CGST and SGST on the remaining amount i.e. -remuneration will be paid to the Reinsurance Broker.
If total amount is paid to the Reinsurance broker, the broker is supposed to get total amount along with IGST and deposit IGST with Govt while remitting the premium to Reinsurer under RCM and avail ITC.
For the above situation, it is to be considered as export service therefore, not taxable under GST. But as per practice the total premium received by the Reinsurance broker which is considered export services subsequently the premium is remitted to Indian Reinsurer by the Broker and such transaction will not be considered as export service.
For the above situation, it is to be considered as export service therefore, not taxable under GST. But as per practice the total premium received by the Reinsurance broker which is considered export services subsequently the premium is remitted to Indian Reinsurer by the Broker and such transaction will not be considered as export service.
The best option will be that the invoice may be raised on the Foreign Insurer by showing separate Premium amount and remuneration separately so that GST liability will not arise.
If premium and remuneration is not shown separately, RCM is to be followed by the reinsurance broker.
Incoming premium will be considered as an export services –No GST
Incoming premium will be considered as an export services –No GST
While remitting premium outside India by Reinsurer Broker – IGST payable on RCM basis and avail ITC
1, Advance payment received from Insurer (Rule 3 of time of supply)
1, Advance payment received from Insurer (Rule 3 of time of supply)
2, Through credit/debit notes
3, Against invoice
All above modes will attract GST even paid to brokers unless & until the premium and brokerage is shown separately in the invoiceas per Rule 7 of Determination of value of supply :
M/s ABC Reinsurance Broker provides the services to M/s XYZ Insurer and receives the amount of Rs 100 lakhs consist of Rs 95 lakhs as premium and Rs 5laksh as remuneration.
M/s ABC Reinsurance Broker provides the services to M/s XYZ Insurer and receives the amount of Rs 100 lakhs consist of Rs 95 lakhs as premium and Rs 5laksh as remuneration.
If the invoice is raised for Rs 100 lakhs the IGST or CGST and SGST will be applicable on Rs 100 lakhs @ 18% which comes out to Rs 18 lakhs. It means the broker will consider his income of Rs 100 lakhs and not Rs 5 lakhs. It may inflate his revenue and while remitting this amount to Reinsurer it will be his expenditure and GST is also applicable on it.
Otherwise, Rs 5 lakhs being an actual income will attract GST.
