Example 50

LIC received  : premium as follows:

I .  Only risk cover policy : Rs. 10 lakh

2.  Variable assurance policy : Rs. 60 lakh

[out of Rs. 60 lakh : 70% invested by LIC on behalf of insured person & the fact known to the person

3.  General policy : Total premium Rs. 70 lakh out of which premium of Rs. 5 lakh is for first year premium.

Find out GST assessable value in all independent cases?

Answer

1                    As per proviso to sub-rule (4) of rule 32(Determination of value in respect of certain supplies ) of Chapter - IV of CGST Rules, 2017, where the entire premium paid by the policy holder is only towards the risk cover in life insurance, then clauses (a) to (c) of  this sub-rule will not apply. Accordingly, GST would be charged on full value of policy i.e. Rs. 10 lakh in this example.

  2                    As per above clause (a) of sub-rule (4) of rule 32, gross premium charged from a policy holder reduced by the amount allocated for investment will be the value of supply. Therefore, in second example, Rs. 60lakh – 60*70% = Rs. 18 lakh will be taxed as GST.

3                    According to clause (c) of above referred sub-rule (4) , twenty five per cent. of the premium charged from the policy holder in the first year and twelve and a half per cent. of the premium charged from policy holder in subsequent years is the taxable value. In this case taxable value will be computed as under;

5  lakh = Value taken for GST  Rs. 1.25 lakh

65 Lakh = Value Taken for GST Rs. 8.125 lakh

Total Value on which GST would be charged = Rs. 9.375 Lakh