HSN codes, or Harmonized System of Nomenclature codes, play a crucial role in categorizing services for tax purposes in India. For the insurance sector, these codes determine the applicable GST rate and assist in claiming Input Tax Credit (ITC). Below is an overview of HSN codes for various types of insurance services.
HSN Codes for Different Insurance Services
- Life Insurance (HSN Code: 997131)
Life insurance services are classified under HSN code 997131. These include term insurance and Unit Linked Insurance Plans (ULIPs). The GST rate varies, with term insurance taxed at 18% and ULIPs at 3%. - Health Insurance (HSN Code: 997133)
Health insurance services fall under HSN code 997133 and are generally taxed at 18%. However, certain government schemes like the Universal Health Insurance Scheme and Niramaya Health Insurance Scheme are GST-exempt. - General Insurance (HSN Code: 997132)
Covering motor, property, and other types of general insurance, this category is assigned HSN code 997132. These services attract an 18% GST rate. - Reinsurance (HSN Code: 997134)
Services related to reinsurance are categorized under HSN code 997134, ensuring proper classification and tax liability. - Marine Insurance (HSN Code: 997135)
Marine insurance services, used for safeguarding goods during transit, are assigned HSN code 997135. - Auxiliary Insurance Services (HSN Code: 998312)
Insurance-related auxiliary services, including risk management and consultancy, use HSN code 998312. - Brokerage and Agency Services (HSN Code: 997161)
Insurance brokerage and agency services are classified under HSN code 997161.
Importance of HSN Codes
- Tax Classification: HSN codes determine the GST rates applicable to different types of insurance services.
- Claiming ITC: Insurance companies can claim ITC based on the GST paid for services and expenses.
Finding the Right HSN Code
To identify the correct HSN code for your insurance product:
- Visit the official GST portal and navigate to “Search HSN Code” under “Services > User Services.”
- Use online HSN code finder tools for quick results.
By understanding and using the correct HSN codes, businesses in the insurance sector can ensure compliance with GST regulations and streamline their tax processes.
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