TREATMENT OF GST ON INSURANCE CLAIMS

[ROHIT GOEL]

Dear Sirs,

One of our client is running an educational institution and is registered in GST because of rental income received in same PAN. Now assessee has received an insurance claim against complete loss of a fixed asset and it is relevant to mention that no input tax credit has been claimed on the purchase of such assets. Whether insurance claim recieved is taxable in GST ?

[KASTURI SETHI]

In this scenario, such compensation is not income/consideration and hence GST is not applicable. This is my view.

[Ganeshan Kalyani]

Yes it is not a consideration hence not taxable.

[YAGAY and SUN]

Being compensation in nature against the Fixed Asset loss, therefore, cannot be treated at par with the consideration. However, in your B/S this compensation received will be treated as current asset.

[Himansu Sekhar]

There will no no GST on the same because you have not taken ITC on the same.

AI Summary

GST treatment of insurance compensation: compensation for loss of a fixed asset is not taxable as consideration in these circumstances.
Insurance compensation for complete loss of a fixed asset is not treated as consideration and therefore does not attract GST where no input tax credit was claimed on the asset; the receipt should be recorded in the assessee's accounts (eg, as a current asset) without giving rise to GST liability.