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 Input Tax Credit on motor vehicle repair expenses under reimbursement settlement mode

The Delhi State Tax Department issued a circular clarifying that insurance companies are entitled to Input Tax Credit (ITC) on motor vehicle repair expenses under reimbursement mode claim settlement. The circular addresses field formation objections regarding ITC availability when garages issue invoices to insurance companies but receive payment from insured parties first, with subsequent reimbursement. The clarification confirms that insurance companies qualify as 'recipients' under GST law since they bear ultimate liability for approved repair costs. ITC is available only to the extent of approved claim amounts reimbursed, and invoices must be issued in the insurance company's name to qualify for credit eligibility.