GST on car insurance is 18% on the premium, for both comprehensive cover and third party only policies, under SAC 997134 (motor vehicle insurance). Two-wheeler and commercial vehicle insurance are also 18%. The reform that exempted individual health and life insurance did not cover motor insurance.
GST applies to the premium you pay, not to the insured value of the vehicle or to the claim amount. This page explains the codes, a premium example, claims and garage bills, and credit for businesses. Health and life insurance are on the insurance page.
Vehicle insurance: codes and GST rates
Item / SAC / GST- Car insurance, comprehensive18%Own damage plus third party
- Car third party liability only18%Mandatory cover
- Two-wheeler insurance18%Bikes and scooters
- Commercial vehicle insurance18%Trucks, buses, taxis
- Add-on covers (zero depreciation, roadside assistance)18%Part of the premium
- Personal accident cover for owner driver18%Bundled with motor policy
- Claim amounts paid by insurerNo GSTNot a supply to the insured
- Repair bills settled by insurer18%Garage charges GST on repairs
Quick facts
SAC
997134: motor vehicle insuranceGST rate
18% (9% CGST + 9% SGST)Exempt?
No, only individual health and life policies were exemptedCharged on
The premium, not the insured valueCredit
Available to businesses for vehicles used in taxable business, subject to blocksDigits to print
4 digits up to Rs 5 crore turnover, 6 above
Gst on car insurance and vehicle insurance: what is taxed
| Item | GST |
|---|---|
| Own damage premium | 18% |
| Third party premium | 18% |
| Add-on covers | 18% |
| Owner driver personal accident cover | 18% |
| No claim bonus discount | Reduces the premium, so reduces GST |
| Claim amount paid to you | No GST |
| Repair bill at a garage | 18% charged by the garage |
Gst on bike insurance
Two-wheeler insurance, comprehensive or third party, is 18%. Long term multi-year policies carry 18% on the premium for the whole term, charged when the policy is issued.
Car insurance gst rate and the health insurance exemption
Many buyers expected motor insurance to become cheaper when individual health and life policies were exempted on 22 September. That exemption applies only to life and health cover for individuals. Motor policies, fire policies, shop policies and other general insurance remain at 18%. Group health covers bought by employers also stay at 18%.
Gst on bike insurance for fleets and dealers
Two-wheeler dealers often sell insurance with a new bike as a corporate agent of an insurer. The commission they earn is a service; insurance agent commission paid by an insurer is under reverse charge in many cases, so the insurer pays the GST on it. Fleet owners insuring delivery bikes pay 18% on premiums and may take credit only where the law allows it for vehicles of that kind and use.
Claims and garage bills
When the insurer settles a claim with a garage under cashless repair, the garage issues a GST invoice for parts and labour at 18%, and the insurer pays it. The insured pays any deductible or depreciation share, which also carries the garage's GST. A claim amount paid to the insured for a total loss is compensation, not a supply. See auto parts.
Credit for businesses
Credit for motor insurance is open to a business only where the vehicles themselves are eligible for credit, such as goods carriages and vehicles used for transport of passengers or training. Credit on insurance of motor cars for staff use is generally blocked under section 17(5). See cars.
Motor insurance rates here describe the general position under the services notification. Policy wording and the vehicle's use decide credit eligibility, so check the GST portal and ask a GST practitioner or chartered accountant about fleet policies.
Frequently asked questions
Does car insurance attract GST?
It does: 18% on the premium.
Is vehicle insurance exempt like health insurance?
No. Only individual health and life insurance were exempted. Motor insurance remains at 18%.
What is the GST on bike insurance?
Two-wheeler insurance is taxed at 18%.
Is GST charged on the claim amount?
No. A claim amount paid to the insured is not a supply. Garages charge GST on repair bills.
Can a business claim ITC on car insurance?
Only if the vehicle itself qualifies for credit. Credit on insurance of staff cars is generally blocked.