Karnataka AAR bench has ruled that GST shall not be applicable on LIC policy’s maturity amount since the same doesn’t qualify as a service. However, the premium amount is taxable being the consideration that it is a service provided by the insurance companies.
“The insurance premium of policies is taxable under GST, being the consideration for the services provided by the insurance companies. Therefore, on completion of the said contract/maturity of the policy, there would not be any service involved between the policyholder and the insurance company,” Reads the ruling.
The same ruling also mentions that salary of a company’s director also not subject to GST as the same does not qualify as a service.
The ruling was delivered in response to the application made by one Anil Kumar Agarwal, who is an unregistered person and a receipent of various types of income like director’s salary, partner’s salary, maturity of LIC policy etc.