LIC maturity sum will not attract GST

In a significant ruling, the Karnataka Advance Ruling Authority has said that LIC’s maturity sum will not attract GST as it is not a service, putting an end to the ambiguity over the issue among taxpayers.

“The insurance premium of policies is taxable under GST, being the consideration for the services provided by the insurance companies. Therefore, on completion of the said contract/maturity of the policy, there would not be any service involved between the policyholder and the insurance company,” a bench headed by Ravi Prasad M.P. and Mashhood Ur Rehman Farooqui said.

“Therefore, the amounts received on maturity of the insurance policies are not relevant to the aggregate turnover and, hence, are not required to be added to the aggregate turnover for registration under the provisions of the GST Act,” the ruling said.

Abhishek Jain of EY said the ruling will provide clarity on various ambiguities, while M.S. Mani of Deloitte feels this will ensure that businesses have more clarity on the computation of aggregate turnover.

Source: The Telegraph