Insurance companies don't pay GST on salvage if it's insured's property. But if it's insurer's property, GST is due on sale.

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Full Text of the Document

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....The Circular addresses the taxability of salvage/wreck value in motor vehicle insurance claims under GST law. Insurance companies are not liable to pay GST on salvage deducted from claim settlements if such salvage remains the property of the insured. However, if the insurance contract settles the claim without deducting salvage value, making salvage the property of the insurance company, GST is payable on the disposal/sale of the salvage. The circular emphasizes that in cases where salvage deductions are contractually agreed upon, insurance companies do not incur GST liability on the salvage. Suitable trade notices are advised for dissemination, and any implementation difficulties should be reported to the Board.....