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Determination of value of supply in relation to Life Insurance business [Rule 32(4) of CGST Rules] - GST Ready Reckoner - GSTExtract Special provision related to determination of value of service in relation to life insurance business - Rule 32(4) of the GST Rules Taxable value varies with nature of insurance policy. The details are as follows:- Where policy has dual benefits of risk coverage and investment Taxable value is gross premium charged less amount allocated for investments or savings if such allocation is intimated to the policy holder at the time of collection of premium. Single premium annuity policy where allocation for investments and savings is not intimated to the policy holder taxable value is 10% of the single premium charged from the policy holder. Other cases- (a) 25% of premium charged from the policy holder in the first year, and (b) 12.5% of premium charged for subsequent years. where insurance policy has benefit of risk coverage only - then taxable value is entire premium charged from the policy holder. Example :- Max L i f e Insurance Company Ltd. (MLICL) has charged gross premium of ₹ 1 8 0 lakh from policy holders with respect to life insurance policies in the 2022-23; out of which ` 10 0 l a k h h av e been allocated for investment on behalf of the policy holders. C o m put e t he value of supply of life insurance services provided by MLICL. ( i ) i f the amount allocated for investment has been intimated by MLICL to policy holders at the time of supply of service. ( i i ) if the amount allocated for investment has not been intimated by MLICL to policy holders at the time of providing of service. ( i i i ) if the gross premium charged by ALICL from policy holders is only towards risk cover. No te : MLICL has started its operations in the year 2022-23. Thus, the entire gross premium of ₹ 1 8 0 lakh is the premium for the first year of all the policies. ALICL has not issued any single premium annuity policy. In this case value of supply of life insurance services provided by MLICL in financial year 2020-21 will be computed as follows: (i) Amount allocated for investment intimated to policy holder at the time of supply of service Value of service = ₹ (180-100) lakh = ₹ 80,00,000 (ii) Amount allocated for investment not intimated to policyholders at the time of supply of service Value of service = 25% of ₹ 180 lakh = ₹ 45,00,000 (iii) Gross premium received is only towards risk cover Value of service = ₹ 180 lakh
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