Clarifications on Taxability of No Claim Bonus and E-Invoicing: Circular No. 186/18/2022-GST
<p><span>The Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 186/18/2022-GST on 27th December 2022 to provide clarifications on the taxability of No Claim Bonus offered by insurance companies and the applicability of e-invoicing for certain entities. Here are the key highlights:</span></p><p><span><strong>1. Taxability of No Claim Bonus (NCB)</strong></span></p><ul><li><span><strong>Non-Consideration for Supply:</strong> No Claim Bonus (NCB) is a discount offered by insurance companies to policyholders who do not make any claims during the previous insurance period(s). It is clarified that NCB cannot be considered as a consideration for any supply provided by the insured to the insurance company.</span></li><li><span><strong>Permissible Deduction:</strong> NCB is a permissible deduction under section 15(3)(a) of the CGST Act for the purpose of calculating the value of supply of insurance services. GST is leviable on the actual insurance premium amount payable after deducting NCB.</span></li></ul><p><span><strong>2. Applicability of E-Invoicing</strong></span></p><ul><li><span><strong>Entity-Wide Exemption:</strong> The exemption from mandatory generation of e-invoices as per Notification No. 13/2020-Central Tax applies to the entire entity and not just to certain supplies made by the entity.</span></li><li><span><strong>Example:</strong> A banking company providing banking services and supplying goods, including bullion, is exempted from mandatory issuance of e-invoice for all its supplies.</span> <a href="https://cms.plasament.com/storage/cir-186-18-2022-cgst.pdf">cir-186-18-2022-cgst</a><br> </li></ul>