As   per  practice  prevailing   in  the  insurance sector,   the    insurance   companies   deduct    No Claim Bonus from the gross insurance premium amount, when no claim is made by the insured person during the previous insurance period(s). The customer/ insured procures insurance policy to indemnify himself from any loss/ injury as per the  terms  of   the  policy,  and   is  not  under   any contractual  obligation  not   to  claim  insurance claim  during  any   period  covered  under   the policy, in lieu of No Claim Bonus.

It  is,   therefore,  clarified  that there  is  no   supply provided  by    the  insured   to    the   insurance company in form of agreeing to the obligation to refrain from the  act of lodging insurance  claim during the previous year(s)and No Claim Bonus cannot be considered as a consideration for any  supply provided by the insured to the insurance company.

As per clause (a) of sub-section (3) of section 15 of  the   CGST  Act,  value   of  supply  shall   not include any discount which is given before or at the time of supply if such discount has been duly recorded in the invoice issued in respect of such supply.

The insurance companies make the disclosure of the fact of availability of discount in form of No Claim  Bonus,  subject   to  certain  conditions,   to the  insured  in   the  insurance  policy   document itself and also provide the details of the no claim Bonus in the invoices also. The pre-disclosure of NCB    amount   in   the    policy   documents   and specific mention of the discount in form of No Claim  Bonus  in   the  invoice  is   in  consonance with  the   conditions  laid  down   for  deduction  of discount from the value of supply under clause (a) of sub-section (3) of section 15 of the CGST Act.

I=t  is,   therefore,  clarified  that   No  Claim  Bonus (NCB)   is  a  permissible   deduction  under  clause (a) of sub-section (3) of section 15 of the CGST Act  for  the   purpose  of  calculation   of  value  of supply of the insurance services provided by the insurance company to the insured. Accordingly, where  the   deduction  on  account   of  No  claim bonus   is  provided  in   the  invoice  issued   by  the insurer to the insured, GST shall be leviable on actual   insurance  premium  amount, payable  by the policy holders to the insurer, after deduction of No Claim Bonus mentioned on the invoice.

In  terms   of Notification  No.  13/2020-Central Tax dated 21stMarch, 2020, as amended, certain entities/sectors have     been    exempted    from mandatory generation of e-invoices as per sub-rule (4) of rule 48 of Central Goods and Services Tax Rules,  2017.   It  is  hereby   clarified  that  the said exemption from generation of e-invoices is for the entity as a whole and is not restricted by the  nature   of  supply  being   made  by  the   said entity.

Illustration:  A   Banking  Company  providing banking   services,    may   also   be    involved   in making    supply   of   some    goods,   including bullion. The said banking company is exempted from  mandatory   issuance  of  e-invoice  in   terms of Notification No. 13/2020-Central Tax, dated 21st March, 2020,as amended, for all supplies of goods and services and thus, will not be required to  issue   e-invoice  with   respect  to  any   supply made by it.