Goods and Services Tax (GST) is an indirect tax levied on the supply of goods and services in India. It is a comprehensive, multi-stage, destination-based tax that is levied on every value addition. It is applicable to all businesses across India, including insurance intermediaries. The applicability of GST on services provided by the Insurance Regulatory and Development Authority of India (IRDAI) to insurance intermediaries has been a matter of debate ever since the implementation of the GST regime in India.
The applicability of GST can be quite confusing, especially when it comes to the services provided by the IRDAI to insurance intermediaries. In this article, we will explain the applicability of GST on services provided by the IRDAI to insurance intermediaries in detail.
IRDAI is the regulatory body for the insurance sector in India. It provides several services to insurance intermediaries, including:
The applicability of GST on the services provided by IRDAI to insurance intermediaries depends on the nature of the services provided. The GST law provides that services provided by a government entity to another government entity are exempt from GST. However, services provided by a government entity to a non-government entity are taxable under GST.
In the case of IRDAI, it is a government entity, and insurance intermediaries are non-government entities. Therefore, the services provided by IRDAI to insurance intermediaries are taxable under GST.
However, there is an exception to this rule. The GST law provides that services provided by a government entity to a non-government entity are exempt from GST if the consideration for such services is less than Rs. 50 lakhs per annum. In such cases, the government entity is not required to register under GST and the non-government entity is not required to pay GST on the services received.
Therefore, if the services provided by IRDAI to insurance intermediaries are less than Rs. 50 lakhs per annum, then GST is not applicable on such services.
The GST rate applicable on the services provided by IRDAI to insurance intermediaries is 18%. This is because the services provided by IRDAI to insurance intermediaries are classified under the category of “support services to insurance and pension funding” which attract an 18% GST rate.
The applicability of GST on services provided by IRDAI to insurance intermediaries can be quite confusing. However, it is important for insurance intermediaries to understand the applicability of GST on such services to ensure compliance with the GST law.
In conclusion, the services provided by IRDAI to insurance intermediaries are taxable under GST if the consideration for such services is more than Rs. 50 lakhs per annum. If the consideration is less than Rs. 50 lakhs per annum, then GST is not applicable on such services. The GST rate applicable on the services provided by IRDAI to insurance intermediaries is 18%.
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