The Government of Maharashtra on July 04, 2024, issued a Clarification on the taxability of salvage/ wreck value earmarked in the claim assessment of the damage caused to the motor vehicle.
The following has been stated:
• It clarifies that Insurance companies shall provide vehicle insurance services, charging premiums from owners, where the service includes repairing damaged vehicles or compensating insured persons, falling under GST's definition of supply.
• It clarifies that in insurance contracts where salvage value deduction is made, the insurance company shall incur no GST liability, but if salvage becomes their property due to full claim settlement, GST shall be payable on its disposal/sale.
• It clarifies that Insurance companies shall not be liable for GST on salvage deducted as deductibles from claims where it remains the insured's property, GST shall be applicable when salvage becomes the insurance company's property upon full claim settlement.
[Notification No 10T of 2024]
