Insurance players are planning to file a writ petition over the tax demand on commission paid for co-insurance, seeking a clarity from the court as levying Goods and Services Tax (GST) on the commission will amount to double taxation.However, with no GST Council meeting in sight now before the formation of new government and the sector facing March 31 as a deadline to pay the tax, insurance companies are planning to file the writ petition against the tax demand before the end of this month, ET has learnt. The term ‘co-insurance' means the insured has an option to spread their risk amongst more than one insurer by allocating risk shares to multiple insurers. The first insurer is called the lead insurer and the second is the co-insurer. It is a general industry practice done in cases where the risk involved is high.
In September last year, ET had first reported that the Directorate General of Goods and Services Tax Intelligence (DGGI) had issued notices to ICICI Lombard and six other insurance companies raising tax demand, which were later sent across the industry to companies offering co-insurance. So far, over 20 insurance companies in the country are facing similar tax demands.
Sources from the industry said that the General Insurance Council, which is the apex association of all general insurance companies, has communicated with the finance ministry, which through an email dated February 19 said that the matter will be resolved soon.
