Can you claim tax benefit on GST paid on insurance Premium?
Taking an Insurance policy provide you with Benefits
1. Insurance cover for your Life or for your Health Medical Needs
2. Deduction under Income Tax under section 80C up to 1.5 lakh or 80D up to 100000 for medical /health Insurance
If you take an insurance policy then you have to pay GST along with Insurance premium
GST Is paid as % of Premium paid on the insurance premium and @ 18% it becomes a very substantial amount
Now our question is whether the GST paid with the basic insurance premium qualifies for getting tax benefits. However, Many DDOs are denying the deduction on the GST paid on the insurance premium and allowing the deduction only on the premium amount.
In most insurance policies, GST is on insurance premiums.
Everybody is concerned About the GST treatment as Per Income Tax act
Rate of GST on Insurance policy
1. Medical Insurance: GST 18% of Insurance premium
2. Term Life Insurance: 18% of Insurance premium
3. Unit-linked Insurance policy: 18% of charges in policy Like Mortality charges, investment charges, switching charges, ledger charges, AMC charges etc
4. Traditional plan Like a money-back, endowment plan, whole life plan
4.5% of the first year premium
2.25 % of the Renewal premium
Health Insurance amount:10000
GST 18%: 1800
Total Amount paid:11800
How much is a deduction allowed u/s 80D 11800 or 10000
Tradition Life Insurance Plan
Ist Year Premium:10000
GST @4.5%: 450
Total Amount paid:10450
How much is a deduction allowed u/s 80D 10450 or 10000
What are the provisions (80C ] 80C(2)
The sums referred to in sub-section (1) shall be any sums paid or deposited in the previous year by the assessee— (i) to effect or to keep in force an insurance on the life of persons specified in sub-section (4);
What are the provisions (80D ] Where the assessee is an individual, the sum referred to in sub-section (1) shall be the aggregate of the following, namely:— (a) the whole of the amount paid to effect or to keep in force an insurance on the health of the assessee or his family
Section 80 C used the word " any sum paid" and 80D section " whole of the amount paid" to purchase a new insurance policy or to keep the old policy effective. GST is a statutory levy and without paying GST on insurance premiums you can not take a new policy or keep an effective old insurance policy.
Accordingly, We can conclude that GST also qualifies as a deduction in broadly worded " any sum paid" whole of the amount " deduction provisions under the Income-tax Act hence deduction can be claimed on the entire amount paid to the insurance company including GST paid on the insurance premium.