Clarification on Life Insurance Premium and Input Tax Credit
Rule 32(4) of CGST Rules: Life insurance premiums not included in taxable value per Rule 32(4) are not considered exempt or non-taxable supplies.
Life Insurance Business: Defined under Section 2(11) of the Insurance Act, 1938, it includes contracts for insurance upon human life and investment-linked policies.
Exempt Supply: As per Section 2(47) of the CGST Act, includes nil-rated, wholly exempt, or non-taxable supplies.
Non-Taxable Supply: Defined in Section 2(78) of the CGST Act as supplies not leviable to tax under CGST or IGST Acts.
Taxability of Life Insurance: Life insurance services are taxable; only the investment portion is excluded from the taxable value.
Input Tax Credit (ITC) Reversal: No need to reverse ITC for the premium portion not included in taxable value.
Rule 42 of CGST Rules: Applies to reversal of ITC only for exempt supplies, which does not include the non-taxable portion of life insurance premiums.
Final Clarification: Premium amount not included in taxable value under Rule 32(4) is neither exempt nor non-taxable, hence no ITC reversal required.