GST on insurance premium: what a business can and cannot take credit for
Company-paid group cover is treated differently from an employee personal policy, and the difference is often mishandled.
GST is charged on insurance premium. Whether a business can take input tax credit on it depends on the type of cover and on whether providing it is obligatory.
The general position
- Credit on general insurance for business assets - fire, marine, machinery, liability - is normally available where the asset is used for business.
- Credit on health and life cover for employees is restricted, unless providing that cover is obligatory under a law in force for the employer.
- Credit on motor insurance follows the credit position of the vehicle itself, which depends on how the vehicle is used in the business.
Practical steps
- Ensure the invoice carries the correct company GSTIN and legal name - a mismatch blocks the credit
- Ask the insurer for a GST invoice, not only the premium receipt
- Keep employee benefit policies documented separately from asset policies for clean reconciliation
- Confirm the place of supply on multi-state operations
This is a summary of the general position, not tax advice. GST treatment depends on your facts and on the law in force at the time. Confirm with your tax adviser; we will make sure the paperwork from the insurer supports whatever position you take.