Entitlement of ITC by the insurance companies on the expenses incurred for repair of motor vehicles in case of reimbursement mode of insurance claim settlement

Insurance Companies Can Claim ITC on Motor Vehicle Repair Costs in Reimbursement Mode, Clarifies Circular.

The circular clarifies the entitlement of Input Tax Credit (ITC) for insurance companies on expenses incurred for motor vehicle repairs under the reimbursement mode of insurance claim settlement. It states that insurance companies can claim ITC on repair services provided by garages, even when the insured initially pays and is later reimbursed. The insurance company is considered the 'recipient' of services under the GST Act, allowing ITC on the approved repair costs. However, ITC is only available on the reimbursed amount, not on any excess costs. If invoices are not in the insurance company's name, ITC is not available.