Clarification on inclusion of Co-Insurance and Reinsurance Transactions into Schedule III

(Circular No. 244/01/2025-GST dated 28th Jan 2025)

The GST Council, in its 53rd meeting on 22nd June 2024, made important recommendations regarding certain transactions under the GST Act. Here’s what the circular explains:

  1. New Transactions in Schedule III (Effective from 01.11.2024, vide Notification No. 17/2024-Central Tax dated 27.09.2024):

The following activities are now categorized as “neither supply of goods nor supply of services” under the CGST Act, 2017:

  1. Co-Insurance Premium Sharing: When a lead insurer shares the co-insurance premium with co-insurers, it is not treated as a supply, provided the lead insurer pays all applicable GST on the full premium amount.
  2. Reinsurance Transactions: 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 all applicable GST taxes are 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.

2. Retrospective GST Regularization: GST payments on the above transactions for the period 01.07.2017 to 31.10.2024 have been regularized on an “as is where is” basis. This means no additional GST liabilities will arise for past transactions.

3. These changes were implemented through the Finance (No. 2) Act, 2024 and became effective from 01.11.2024 (via Notification No. 17/2024-Central Tax, dated 27.09.2024).