Commission received from Life Insurance Corporation Of India

[MAHTAB KHAN]

Whether the applicant, who is a registered dealer primarily engaged in the purchase and sale of capital goods and not providing any services as a regular business activity, is liable to pay GST on the commission income received from Life Insurance Corporation (LIC) of India, which has been duly recorded in the Profit & Loss Account as other income?

AI Summary

Dealer receiving LIC commission income exempt from GST under Notification 13/2017 Entry 7 reverse charge A registered dealer primarily engaged in buying and selling capital goods received commission income from Life Insurance Corporation and questioned GST liability on this income recorded as other income. Tax experts clarified that under Notification No.13/2017-CTR Entry No.7, GST is payable by the insurance company under reverse charge mechanism on services provided by insurance agents, so the dealer need not pay GST on commission income even if exceeding Rs.20 lakhs. However, such services under reverse charge are treated as exempted supplies, requiring proportionate reversal of common input tax credit under Rules 42/43 of CGST/SGST Rules.