In a significant ruling, the Karnataka Advance Ruling Authority has said that LIC’s maturity sum will not attract GST as it is not a service, putting an end to the ambiguity over the issue among taxpayers.
The Applicant has received Maturity Proceeds from LIC. The income of Maturity Proceeds would be received on the maturity of the insurance policies. As the income is received on the closure of the insurance contract consequent on the maturity of the said policies. Insurance Premium is the consideration for the services provided by the insurance companies. Thus insurance premium of policies is taxable under GST.
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. Therefore, the amounts received on maturity of the insurance policies are not relevant to the aggregate turnover and hence are not required to be added to the aggregate turnover for registration under the provisions of the GST Act.
The ruling will provide clarity on various ambiguities and this will ensure that businesses have more clarity on the computation of aggregate turnover.
Thus it can be interpreted that LIC maturity proceeds sum will not attract GST.