Value of supply in case of life insurance business under GST

Summary of Rule 32(4) of CGST 2017: Value of supply in case of life insurance business:

The value of supply of services in relation to life insurance business shall be –

(a)  If allocation amount for investment or saving is separately Intimated to the policy holder, at the time of supply:

• Value of Supply: The gross premium charged from a policy holder reduced by the amount allocated for investment, or savings

(b)  In case of single premium annuity policies:

• Value of Supply: 10% of single premium charged

(c)  Any other case other than point (a), (b) & (d) then Value of Supply shall be:

• First year: 25% of premium charged
• Subsequent year: 12.5% of premium charged

(d)  If entire premium is towards risk cover:

• Value of Supply: Total premium charged

Extract From Rule 32(4) of CGST 2017: Value of supply in case of life insurance business:

Notwithstanding anything contained in the provisions of this Chapter (i.e. Chapter-IV: Determination of Value of Supply), the value in respect of supplies specified below shall, at the option of the supplier, be determined in the manner provided hereinafter.

The value of supply of services in relation to life insurance business shall be, –

• the gross premium charged from a policy holder reduced by the amount allocated for investment, or savings on behalf of the policy holder, if such an amount is intimated to the policy holder at the time of supply of service;
• in case of single premium annuity policies other than (a), 10% of single premium charged from the policy holder; or
• in all other cases, 25% of the premium charged from the policy holder in the first year and 12.5% of the premium charged from the policy holder in subsequent years:

Provided that nothing contained in this sub-rule shall apply where the entire premium paid by the policy holder is only towards the risk cover in life insurance.