Input credit of GST in Case of Accident claim

[Yogesh Ashar]

Dear Sir

In case of transporter who is charging GST on forward charge basis @12%, the query is in reference to insurance claim received on accident of truck. The Insurance company settled @75% of the amount. 25% is borne by the transporter. The amount billed by the repairer is in the name of the Company, where he has billed for the total amount.

Queries

1. Whether any GST has to be charged to the Insurance Company and accordingly a tax invoice needs to be raised for the 75% amount settled by the Insurance company

2. Whether full ITC can be claimed by the Tranporter

3. Whether it will have to reverse 75% of the ITC

Thanks

AI Summary

Transporter Seeks Clarity on GST for Insurance Claims; Debate on ITC Reversal and 'Consideration' Definition A transporter charging GST on a forward charge basis at 12% inquired about GST implications on an insurance claim for a truck accident. The insurance company settled 75% of the claim, with the transporter covering the remaining 25%. The queries were whether GST should be charged on the settled amount, if full Input Tax Credit (ITC) can be claimed, and whether 75% of the ITC needs reversal. Responses varied: one suggested reversing proportionate ITC; another argued no GST applies as the claim is compensation, not consideration, and no ITC reversal is necessary. The legal definition of 'consideration' was also discussed.