ITC on key man insurance policy

[Nisha Prabhu]

Whether input tax credit is allowed on key man insurance policy taken of officers and directors

[KASTURI SETHI]

Go through proviso to Section 17(5)(b) of CGST Act which is as follows:-

Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.]

Thus if key man insurance policy taken for officers and directors is obligatory on the part of Employer-Company, ITC can be taken, otherwise not.

[Bharat Sharma]

Please guide us on the GST credit availability on Directors & Officers Commercial liability insurance as well.

AI Summary

Input tax credit on key-man insurance allowed only where employer is legally obliged to provide such cover. Input tax credit on key-man insurance for officers and directors is available only where the employer is legally obliged to provide such insurance; if no legal obligation to furnish the cover exists, ITC is not permitted. A related question asks whether Directors & Officers commercial liability insurance qualifies for GST credit under the same obligatory-provision principle.