Insurance claim on goods damage in transit (Sales)

[Yatin Bhopi]

We have supplied goods on door delivery basis, but goods were damaged in transit due to accident. Now we are submitting our insurance claim GST paid by us. Please share your views on below queries.

1. Are we need to claim GST also? (Rs. Taxable value ₹ 100+ GST ₹ 18 = ₹ 118)

2. let know how to treat GST in returns and books

[Mahadev R]

Claiming the entire amount of ₹ 118 is ideal as ITC on damaged goods could be disallowed.

[Alkesh Jani]

Sir,

In my view, as goods are damaged in transit, goods will be returned back. In books of account it will as returned (damage) goods. In this case, insurance can be claimed for value of goods only and not for GST, as GST is leviable on supply, here it cannot said that goods are supplied and also it is not received by the recipient. Moreover, in this case, we can say that transaction is not completed.

Thanks,

With regards

[Ganeshan Kalyani]

Insurance claim is allowed for goods only. ITC claimed should be reversed. When you account for the return in the books credit the tax component in the GST receivable account.

[KASTURI SETHI]

Goods were damaged before the completion of supply. So it can be said that goods were damaged at the hands of supplier.No right of claiming the element of GST from Insurance Company. Rightly advised by Sh.Alkesh Jani Ji and Sh.Ganeshan Kalyani Ji.

[Yatin Bhopi]

Thanks for sharing your views,

We are liable to reverse the ITC availed on damage or lost goods as per section 17(5)

In this case can we claim this ITC reverse amount from insurance company since this is loss to us.

[YAGAY andSUN]

In our view, yes, you can claim from insurance company the amount of ITC which was either reversed or not claimed by you in this transaction. However, you need to show them the relevant provision under Section 17(5) of the CGST Act to the Insurance company.

[KASTURI SETHI]

Now two issues are involved :

(a) GST paid on finished goods.

(b) GST paid on inputs contained in finished goods.

Yes, you can claim the amount of ITC contained in the finished (damaged) goods from Insurance Company inasmuch as there is no provision for remission of tax paid on finished (damaged) goods in GST Acts. You will have to intimate about the insurance claim (inclusive of GST paid on inputs) to your jurisdictional GST Range Officer.

[Ganeshan Kalyani]

In nutshell double benefit cannot be taken. That is for sure. I mean either input tax credit can be taken or insurance claim can be sought.

AI Summary

Insurance recovery of input tax credit: insurers may cover ITC-reversed losses but double recovery of GST benefits is barred. Insurers generally indemnify the value of damaged goods but not the GST on a supply that was not completed; suppliers must reverse input tax credit for lost or damaged goods and record the reversal in GST receivable/tax accounts. Claiming reimbursement from insurers for the ITC component may be possible where ITC has been reversed, but taxpayers must avoid double recovery and should notify the tax authorities when making such insurance claims involving tax-bearing inputs.