Whether GST paid along with Insurance premium is also eligible for deduction u/s 80C & 80D ?


This is an interesting question raised by thr readers of our portal. Let us discuss.

Section 80C and Section 80D of Income tax Act entitles individual & HUF taxpayers to claim deduction for the entire amount paid to the insurance company for specified insurance schemes. GST being an indirect tax is charged/recovered by the supplier of services from the recipient with actual value of service.
Thereby, a collective reading of income tax and GST laws would convey that entire amount paid to the insurance company including applicable GST would be allowed as a deduction.
Policyholder understands that it is contractually provided (in the policy document/renewal intimations etc.) that GST would be recovered in addition to the premium. Accordingly, without the payment of GST, the obligation of the policyholder would not be discharged, i.e., the policy will not be active.
Accordingly, a component of GST as an element of the premium is eligible for deduction subject to an overall cap of the Section. Also, principally the logic for section 80D would remain same as for section 80C. Without the payment of GST, the obligation of the assessee would not be discharged
As per section 80C of the income-tax Act, any sum paid to effect or keep in force a contract of life insurance is allowed as deduction. The term ‘sum paid’ is wide enough to include the annuity, charges levied by the insurer and the taxes that have been levied on the quantum of annuity paid. Thus, the GST paid on the instalment can be claimed as deduction under 80C.