Exemption of reinsurance schemes, in respect of specified insurance schemes

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Miitliifi irJai IRDA/F&A/CIR/MISC/052/03/2018 To All Insurers \il{~i'-4 itin fc1Pi41'1¥ ~ N ~ INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA . . March 27, 2018 Sub: Exemption of reinsurance schemes, in respect of specified insurance schemes, from the purview of GST - Reg. It is informed that the proposal to exempt reinsurance schemes in respect of specified insurance schemes has been approved by the GST Council in its 25th meeting held on 18.01.2018 on the condition that the benefit of reduction in the premium on such Insurance schemes, must be passed on to the beneficiaries and the State and Central exchequers. Insurers shall avoid any undue enrichment on this account. Insurers may note that if necessary benefit on account of reduction in premium is not passed on to the insured / Govt., suitable action against the Insurance Companies may be initiated with National Anti-Profiteering Authority under Section 171 of the CGST Act. In this regard, a copy of D.0. No. 354/12/2013-TRU dated 24.01.2018 from the Finance Secretary is enclosed herewith, for information and necessary action. All insurers are advised to comply with the above in letter and spirit. Encl : a/a ~ ,,,/~.:~ (Pravin H Kutumbe) Member (F & I) The Chairman IRDAI, Hyderabad Sir, F. No. G-14017/20/2017-lns.ll Government of India Ministry of Finance Department of Financial Services (Insurance Division) 2nd floor, Jeevan Deep Building, Parliament Street, New Delhi. Dated: 26th March, 2018 Sub: Exemption of reinsurance schemes, in respect of specified insurance schemes, from the purview of GST - reg. I am directed to inform that the proposal to exempt reinsurance schemes in respect of specified insurance schemes has been approved by the GST Council in its 25th meeting held on 18.01.2018 on the condition that the benefit of reduction in the premium on such Insurance schemes, must be passed on to the beneficiaries and the State and Central exchequers. A copy of DO No. 354/12/2018-TRU dated 24th January, 2018 from the Finance Secretary in this regard is enclosed herewith, for necessary action. 2. This is for information of I ROAi with a request to issue necessary instructions in this regard and submit a confirmatory report on the matter to this Department. Encl.: as above Yours faithfully, (K.~ \a\JG Under Secretary (Insurance-II) Tel: 011-23748759 : . ----· --- - - ~.--~-;--· - I .., "1 • - : . ·. ; .. . - ·- ---- :, - . . :~ . ~ :... . '. - ·- __ ..,._ .. ., .. .. I .... """ I - J I l , .....,..,-T -,.-, 2.!." J31J3~. 2) 13 Kindly refer to your 0 .0. le~er No. 1/Secy'°"(FSf/2017 d:1:ed 20.1 2.2017 see'<ing examination of propos::ds ror ea.se of living of se:1ior citizens and proposals rela~ing t::, in.surance, specifically Pra:lhan ~,lantri Fa.sal Bima Yojana (P1\lrBY). \ 2. Considering the fact that no GST is p:1yable on insurance premium of such schemes and the GST pa:d on the re-insurance is included in the cost of insura.1ce premium charged by the Insurance Companies from the beneficiaries and also shared between the Centre and St1:e Government.s, the proposal to exempt reinsurance schemes in respect of specified insurance schemes has been a::,oroved bv the GST Council in its 25r meeting held at New Delhi on 18.01.2018. A list of the insurance scnemes which are exempt under GST and whose reinsurance have also been exempted from GST is enclosed in the Annexure attached. 3. As you a'e well aw:1~e. re-in.surance service is input service to the insura1ce • company. So, the exemption to re-insurance would virtually zero rate the insurance services in res~ect of t~e abo•te-mentioned schemes. The proposal w:1s recommended by tne Fii:ment Committee on the condit:on that the benefit of reduction in the premiur., on such ln.surance Schemes, must be pa.s.sed on to the beneficiaries and the State and Central exchequers. Since for payment of premium for the exempted Insurance Schemes subs~an~ia' bud~~:aty a!loca::on is ma:le by t~e Government, it may be ensured that the insurance premia, are reduced by Insurance Companies. This may be monitored by the Department an,d concerned nodal Ministry to avoid any undue enrichment to the Insurance Companies. If necessary benefit on a:coun~ of reduction in premium is not pa;;sad on to the in.5ured/ Go11~. , suitable action agains: the lnsura1ce companies may be in/:a:ed 1i1,:ch N:1:ional Anti-Profiteering Authority under section 171 of the CGST Act. With reg 3rd .s, Encl. As above. I Shri Rajiv Kumar, Secretary, Department of Financial Services, 3-d Floor, Jeevan Deep Building, Sansad Marg, New Delhi -11 0001. Yours sincerely, ~ / ~Qy ( Hasmtikh Adhia ) \ I "l ':, ... , A nnexure Services of genera I insurance business provided u ncler following schemes is exempted under GST 1. 2. 3. 4. ~ 6. 7. 8. Janashree Sima Yojana Aam Aadmi Sima Yojana Life micro-insurance product as approved by the Insurance Regulatory and Development Authority, having maximum amount of cover of two lakh rupees · Varishtha Pension Sima Yojana Pradhan Mantri Jeevan Jyoti Sima Yojana (PMJJSY) Pradhan Mantri Jan Ohan Yojana (PMJDY) Pradhan Mantri Vaya Vandan Yojana (PMVVY) Hut Insurance Scheme 9. Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as Integrated Rural Development Programme) 10. Scheme for Insurance of Tribals 11. Janata Personal Accident Policy and Gramin Accident Policy 12. Group Personal Accident Policy for Self-Employed Women 13. Agricultural Pumpset and Failed Well Insurance 14. premia collected on export credit insurance 15. Restructured Weather Based Crop Insurance Scheme (RWCIS), approved by the Government of India and implemented by the Ministry of Agriculture 16. Jan Arogya Sima Policy \..:r'rPradhan Mantri Fasal Sima Yojana (PMFBY) 18. Pilot Scheme on Seed Crop Insurance 19. Central Sector Scheme on Cattle Insurance 20. Universal Health Insurance Scheme 21. Rashtriya Swasthya Sima Yojana 22. Coconut Palm Insurance Scheme ~ Pradhan Mantri Suraksha Sima Yojana 24. Niramaya Health Insurance Scheme implemented by the Trust constituted under the provisions of the National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999).