INPUT CREDIT

[janakiram g]

Sir/Madam

I am working for General Insurance Company. As a part of our business, we need to settle all sorts of claims for which premium collected by us. Motor claims which is one of department in General insurance business where claim settlement involves cost of replacement of parts and Labour charges for repairing the vehicle etc. When a vehicle met with accident, repair of such vehicle will normally done at Authorised Dealer/ Authorised repairer who levies Service Tax (ST ) on labour charges for repairing vehicle. Dealer raises all bills - parts and labour charges, in the name of Insured. These claims ( Motor Accidental Claims ) paid either to Insured or Dealer directly. When we settle these claims to insured / dealer, whether ST charged on labour can be claimed as Input credit by our company. Kindly Clarify.

[Mahir S]

Sir,

such credit does not appear to be eligible to your insurance company.

AI Summary

Input credit ineligibility: service tax on repair labour for motor-claim settlements cannot be claimed by insurer.
The query asks whether an insurance company can claim input credit of service tax charged on labour by authorised repairers for motor-accident repairs billed to the insured, when the insurer reimburses the insured or pays the dealer; the reply states that such credit does not appear to be eligible to the insurance company.