Circular, 2023

Text

Reproduced from the document India Code holds for this instrument. The Gazette prints Hindi and English side by side and this is the English; the Department's own PDF remains the authority.

Office of the. Commissioner, ‘State Tax, Uttar Pradesh (GST Section) ;

- Letter No. GST/2022-23/ SY /State Tax To, . : . _ All Zonal Additional Commissioner Grade. 1, Additional Commissioner Grade -2. (S.L.B.)°- State Tax, Uttar Pradesh. y :

Subject: Clarification:on various issue pertaining to ost. reg. J oO Representations have been received from the field formations seeking clarification on certain issues with respect-to — Sn i. taxability of No. Claim Bonus offered by Insurance « companies; ii. applicability of e-invoicing w.r.t an entity.

2. In order to clarify the issue and to. ensure uniformity in the implementation of the provisions of law. across the field formations, the Commissioner, in exercise of its powers conferred by section 168 of the Uttar Pradesh. Goods and Services Tax Act, 2017 (hereinafter referred to as “UPGST Act, hereby clarifi les the i issues as ‘under: ° of No Claim Bonus allowed by ‘the insurance company from the insurance _premium payable by.

| the insured, can be considered as | consideration . for the supply provided by the insured. to. the insurance company, for agreeing | to the obligation to refrain from.

the act of lodging insurance claim during the previous year(s)? S. No. |. “Tasue i “Clarification po Taxability of No Claim Bonus offered by Insurance companies

1. Whether.the deduction on account | As per practice prevailing in the insurance sector, the insurance companies deduct No Claim Bonus. from the gross. insurance.

premium. amount, when no claim is.made by |. _ the insured --person during the previous.

insurance: period(s). The customer/ insured procures insurance policy to indemnify himself from any. Joss/ injury as per the terms of the policy, and is, not under any contractual ‘obligation not to claim insurance ‘claim - during. any period covered under the policy, i in lieu of No Claim Bonus. a ft is, therefore, clarified that ‘there is no | OC Page 1 of 3 : .

G/c supply provided by the insured to. the insurance company in. form of agreeing to the obligation to refrain from’ the “act of lodging insurance claim during the. previous year(s) and No Claim, Bonus ‘cannot be considered. as a consideration for. any supply, provided by the insured to the insurance company.

Whether No Claim Bonus provided by the insurance company to the insured can be considered as an admissible discount for the purpose of determination of,value of supply of insurance service provided by the insurance company to the insured? As” per clause .(a) of sub-section (3) of section 15 of the UPGST -Act,. value: of supply shall not include any discount -which is given béfore or at the time’ of supply if such discount has been duly recorded in the invoice issued in respect of such supply. *~ The insurance companies make — the disclosure of the fact of availability of discount i in form of No Claim Bonus, subject to certain conditions, to the. insured in the insurance policy document itself and also provide the details of the:no claim Bonus: in |.

the invoices also. The pre-disclosure of NCB amount in the policy documents and specific ‘Mention of the discount in form. of No Claim Bonus ini the invoice is in consonance with the ‘conditions laid: down: for deduction of | discount from the value of supply under clause (a) of sub-section (3) of séction 15 of |.

the UPGST Act. - It . is, therefore, clarified that No Claim Bonus (NCB) is a permissible. deduction under.clause (a) of sub-section (3) of section | .15..0f the UPGST Act. for. the purpose of _ | calculation of value of supply of the | insurance services provided by the insurance company to the insured. Accordingly, where the deduction on account of No claim bonus is provided in the invoice issued by the | insurer to the insured, GST shall be leviable | on actual insurance premium amount, payable by the policy holders to the insurer, after deduction of No Claim Bonus mentioned on the invoice.

Page 2 of 3 Clarification on applicability of e-invoicing w.r.t an entity Whether the exemption from mandatory generation of e- invoices in terms of Notification

No. 428/X]-2-9(47)/17 U.P. Act- 1-2017-Order-(106)-2020 Dated 30.04.2020,as amended, is available for the entity as whole, or whether the same is available only in respect of certain supplies In terms of. Notification No. 428/XI1-2- Dated 30.04.2020, as amended, certain entities/sectors have been exempted from mandatory generation of e-invoices as per | ‘sub-rule .(4) of rule 48 of Uttar Pradesh -Goods and Services Tax Rules, 2017. It is hereby clarified that the said exemption from generation of e-invoices is for the entity as a | whole, and. is not restricted’ by the nature of _| made by the'said entity? : i : Supply being made by the said entity...

| Iustration: A Banking Company providing banking services, may:also be :involved in ee, making supply of.some goods, including . fo bullion. The. said banking company is.

exempted’ from mandatory issuance of: -e- invoice in terms of Notification No. 428/X]- 2-9(47)/17- UP... Act-1-2017-Order-(106)- | 2020: Dated: 30.04.2020, as aménded, for all ‘supplies of goods and services and thus, will not. be ‘téquired to -issue e-invoice with respect to any supply made by it.

3, It is requested that suitable trade notices may be: issued to ‘publicize the contents of this Cireular. oo . 4, Difficulty, if any, in ‘implementation of this Circular may be brought to the notice of _ the Undersigned. ae ‘ ; “By Order, :

_.. Commissioner, State Tax, U.P.

, Copy To:.

1 Joint Commissioner ( T, ), State Tax HQ, Lucknow for uploading the Circular on the : State Tax HQ, Lucknow.

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Provisions this circular answers to

Read out of the instrument itself: an enabling provision is one it says it was made under, which is the power it rests on. The rest it names without resting on.

Other instruments under the same Act

All of the The Uttar Pradesh Goods and Services Tax Act, 2017