<p><span>The Ministry of Finance's Circular No. 214/8/2024-GST, issued on June 26, 2024, provides critical clarifications on the requirement of reversal of input tax credit (ITC) concerning life insurance policies. Here are the key highlights:</span></p><ol start="1"><li><span><strong>Reversal of ITC for Life Insurance Premium</strong>: Clarifies that the amount of insurance premium not included in taxable value as per Rule 32(4) of CGST Rules for life insurance business is not considered a non-taxable or exempt supply. Therefore, there is no requirement for reversal of ITC for such amounts.</span></li><li><span><strong>Inclusion of Investment Component</strong>: Life insurance policies often include an investment component along with the insurance component. The premium allocated for investment or savings on behalf of the policyholder is not taxable but should not be treated as exempt supply.</span></li><li><span><strong>Definition and Scope</strong>: Reiterates the definition of 'life insurance business' under Section 2(11) of the Insurance Act, 1938, including any policy with both investment and insurance components. Confirms that such policies fall within the ambit of life insurance business.</span></li><li><span><strong>Uniform Implementation</strong>: Directs suitable trade notices to be issued for publicizing the contents of this Circular. Ensures uniformity in implementation across field formations, and any difficulties should be reported to the Board.</span> <a href="https://cms.plasament.com/storage/shubham-pathak/circular-no-214-08-2024.pdf">circular-no-214-08-2024</a><br> </li></ol>