53rd GST Council Meeting: 3 Main Clarification on Life Insurance Premiums, ITC for OFC Networks, and taxability of the transaction

Clarification on ITC 

Clarification on ITC in relation to the premium for life insurance policies which is not included in taxable value.

• The amount of premium for taxable life insurance policies, which is not included in the taxable value as per Rule 32(4) of the CGST Rules, 2017 shall not be treated as exempt or non- taxable supply;
• No requirement of reversal of ITC in respect of such premium amount under Rule 42 or Rule 43 of CGST Rules read with Section 17 of CGST Act.

Clarification on availability of input tax credit (ITC) 

Clarification on availability of input tax credit (ITC) on ducts and manholes used in the network of optical fiber cables (OFCs) in terms of sec 17(5) of the CGST act, 2017

Ducts and manholes used in network of OFCs are covered under the definition of “plant and machinery” in the Explanation to section 17 of CGST Act, as they are used as part of the OFC network for making outward supply of transmission of telecommunication signals from one point to another.

• Availment of ITC is not restricted in respect of such ducts and manhole used in network of OFCs, either under clause (c) or under clause (d) of sub-section (5) of section 17 of CGST Act

For more details please refer to the Circular No. 219/13/2024-GST dated 26.06.2024

Clarification regarding taxability of the transaction 

Clarification regarding taxability of the transaction of providing loan by an overseas affiliate to its indian affiliate or by a person to a related person

• Service of granting loan/ credit/ advances by an entity to its related entity is a supply under GST.

The supply of services of extending loans/ credit/ advances, in so far as the consideration is represented by way of interest or discount, is fully exempt under GST vide Notification No. 12/2017-Central Tax (Rate)

• In cases of loans provided between related parties, any fee in the nature of processing fee/ administrative charges/ services fee/ loan granting charges etc. over and above interest or discount will be liable to GST

Source: CBIC