Important Keywords: Circular No. 244/01/2025 – GST, GST on co-insurance premium, reinsurance GST, Schedule III CGST, ceding commission, lead insurer GST, reinsurer tax treatment,
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Circular No. 244/01/2025 – GST
F. No. CBIC-190354/2/2025-TO(TRU-II)-CBEC
Government of India
Ministry of Finance
Department of Revenue
(Tax Research Unit)
******
North Block, New Delhi
Dated the 28th of January, 2025
Circular No. 244/01/2025 – GST: Regularizing payment of GST on co-insurance premium apportioned by the lead insurer to the co-insurer and on ceding /re-insurance commission deducted from the reinsurance premium paid by the insurer to the reinsurer.
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners of Central Tax (All) / The Principal Director Generals/ Director Generals (All)
Madam/Sir,
Subject: Regularizing payment of GST on co-insurance premium apportioned by the lead insurer to the co-insurer and on ceding /re-insurance commission deducted from the reinsurance premium paid by the insurer to the reinsurer – reg.
Based on the recommendations of the GST Council in its 53rd meeting held on 22nd June, 2024, at New Delhi, and in exercise of the powers conferred under section 168(1) of the Central Goods and Services Tax Act, 2017, the following clarification is being issued through this Circular:
2. On the recommendations of the 53rd meeting of the GST Council held in New Delhi on 22nd June, 2024, the following activities or transactions were included in Schedule III of the CGST Act, 2017 as activities or transactions which shall be treated neither as a supply of goods nor as a supply of services:
- Activity of apportionment of co-insurance premium by the lead insurer to the co-insurer for the insurance services jointly supplied by the lead insurer and the co-insurer to the insured in co-insurance agreements, subject to the condition that the lead insurer pays the Central tax, the State tax, the Union territory tax and the integrated tax on the entire amount of premium paid by the insured.
- Services by insurer to the reinsurer for which ceding commission or the reinsurance commission is deducted from reinsurance premium paid by the insurer to the reinsurer, subject to the condition that the Central tax, the State tax, the Union territory tax and the integrated tax is paid by the reinsurer on the gross reinsurance premium payable by the insurer to the reinsurer, inclusive of the said ceding commission or the reinsurance commission.
The above provisions were enacted vide Finance (No. 2) Act, 2024 and have been brought into force on 01.11.2024 vide Notification No. 17/2024-Central Tax dated 27.09.2024.
3. In its 53rd meeting, the GST Council further recommended that the payment of GST on the activities or transactions, as specified in paragraph 2 above, may be regularized for the past period, i.e. from 01.07.2017 to the effective date of amendments in the CGST Act, , on ‘as is where is’ basis.
4. Thus, as recommended by the 53rd GST Council, the payment of GST on the activities or transactions specified in paragraph 2 above is regularized for the period 01.07.2017 to 31.10.2024, on ‘as is where is’ basis.
5. Difficulties, if any, in the implementation of this circular may be brought to the notice of the Board.
Yours sincerely,
(Sachin Jain)
Joint Secretary, TRU-II
📚 Frequently Asked Questions (FAQs): Circular No. 244/01/2025 – GST
Q1: What is the main clarification in Circular No. 244/01/2025-GST?
Answer:
The circular clarifies that GST is not applicable on two specific insurance transactions retrospectively and prospectively:
The apportionment of premium by a lead insurer to co-insurers under co-insurance arrangements
Ceding commission (reinsurance commission) retained by insurers while paying premiums to reinsurers
These are now treated as “neither supply of goods nor supply of services” under Schedule III of the CGST Act.
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Q2: From when is this clarification effective?
Answer:
The changes became effective from 01 November 2024, via Notification No. 17/2024-Central Tax dated 27.09.2024. However, GST paid from 01 July 2017 to 31 October 2024 is regularized on an “as-is-where-is” basis—meaning no refund or additional liability for that period.
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Q3: What is the GST treatment of premium apportioned by a lead insurer to co-insurers?
Answer:
Such apportionments are now covered under Schedule III. No GST is payable by co-insurers on their share, provided the lead insurer has paid GST on the full premium collected from the insured.
💡 Tip: GST must be paid only once—by the lead insurer on the total premium.
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Q4: What is the treatment of ceding (reinsurance) commission under GST now?
Answer:
If the reinsurer charges GST on the gross premium (inclusive of ceding commission), the portion retained by the insurer as commission is not separately taxable. This avoids double taxation on the same transaction.
📑 Example: If ₹100 is the gross premium and ₹20 is ceding commission, reinsurer pays GST on ₹100. Insurer doesn’t charge GST on ₹20 separately.
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Q5: What is the “as-is-where-is” regularization from 01.07.2017 to 31.10.2024?
Answer:
It means that the GST already paid (or not paid) on co-insurance and reinsurance commission during this period will not be questioned, revised, or adjusted. The government has accepted the industry’s practices as they stood during that period.
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Q6: Who benefits from this circular?
Answer:
✅ Insurance companies acting as lead insurers or co-insurers
✅ Reinsurers (domestic and foreign)
✅ Brokers handling reinsurance deals
✅ Tax professionals and auditors advising on GST in insurance
📢 Get your GST regularization strategy checked with Finodha: https://finodha.in/gst-compliance/
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Q7: Is Input Tax Credit (ITC) affected by this change?
Answer:
The circular does not restrict the entitlement to ITC, provided GST is correctly paid by the lead insurer or reinsurer. Co-insurers or insurers retaining commission may still avail credit on other eligible inputs, subject to CGST rules.
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Q8: What compliance steps should insurers take post-circular?
Answer:
✔️ Re-validate tax positions on co-insurance and reinsurance
✔️ Ensure lead insurer pays GST on total premium
✔️ Ensure reinsurer pays GST on gross premium including ceding commission
✔️ Avoid charging or reversing GST on intra-insurer sharing transactions
🛡️ Finodha helps insurers with full-cycle GST return filing: https://finodha.in/gst-return-filing/
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Q9: What if GST was wrongly paid by a co-insurer or insurer on ceding commission before 01.11.2024?
Answer:
Since the period before 01.11.2024 is regularized, no refund or adjustment is required or permitted. The CBIC accepts previous compliance as-is, reducing the risk of litigation.
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Q10: How can Finodha help insurance businesses with GST compliance?
Answer:
Finodha offers specialized support in:
Insurance sector GST mapping
Return filing & compliance
ITC eligibility analysis
Documentation for Schedule III treatments
Setup and registration of insurance intermediaries → https://finodha.in/setup-business/
🏢 Visit www.Finodha.in for complete insurance GST solutions.
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✅ Final Summary:
Circular No. 244/01/2025 – GST offers major relief and clarity for the insurance industry by excluding co-insurance premium sharing and ceding commission from GST under Schedule III, with retrospective protection and forward-looking compliance. Insurers and reinsurers should now streamline invoicing, documentation, and GST returns to reflect this change.
Download PDF: Circular 244/01/2025 – GST
More Information: https://taxinformation.cbic.gov.in/
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