Insurance HSN Code: Complete Guide
Insurance services cover life insurance, health insurance, motor insurance, fire insurance and many other risk covers. In GST these services are classified under service accounting codes which work like HSN codes for services.
Understanding the correct insurance HSN code helps insurers, agents and businesses apply the correct GST treatment, claim input tax credit wherever allowed and prepare accurate returns.
What is Insurance HSN Code?
Insurance services fall under heading 9971 which covers financial and related services. Within this heading separate service codes exist for life insurance, health insurance, motor insurance and other types of insurance products.
| HSN Code | Product name | Product description | GST rate |
|---|---|---|---|
| 997133 | Health insurance services | Health insurance policies for individuals and groups | 0% or 18% depending on notification |
| 997132 | Life insurance services | Life insurance, term plans, endowment and pension related products | 0% or 18% depending on plan structure |
| 997134 | Motor vehicle insurance services | Insurance for cars, trucks, two wheelers and other vehicles | 18% |
| 997139 | Other general insurance services | Fire, burglary, marine, property and other miscellaneous insurance covers | 18% |
Types of Insurance Covered by HSN Codes
The insurance service codes under heading 9971 cover almost every type of insurance product available in the market. Life insurance codes are used for term plans, endowment plans, unit linked policies and annuity products. Health insurance codes apply to mediclaim policies, family floater plans and group health covers.
General insurance service codes apply to motor insurance, fire and property insurance, marine insurance, crop insurance and many other specialised risk covers. Each class of business is mapped to a specific service code which should be used consistently in billing and reporting.
Benefits of Using Insurance HSN Code for Taxation
Using the correct insurance HSN code on premium invoices ensures that GST is charged at the correct rate and that the nature of the policy is clear to both the customer and the tax authorities. It also helps in correctly identifying whether the premium is fully taxable, partly taxable or exempt based on the latest notifications.
For businesses that are eligible to claim input tax credit on insurance premiums, such as certain corporate policies, having the correct service code and tax breakup makes it easier to claim and match the credit in GST returns. It also reduces the chance of disputes during audits.
Conclusion
Insurance services use service accounting codes under heading 9971, with separate codes for life, health, motor and other policies. Applying the correct insurance HSN code on every policy, along with the applicable GST rate, helps insurers and policyholders remain compliant, avoid disputes and understand the tax cost built into insurance premiums.
I’m CA Shivani Kandalkar, a Chartered Accountant based in Mumbai with over 1 year of experience. My focus areas are Taxation and GSTR compliance, where I help individuals and businesses file accurate returns and avoid notices. With a background in M.Com and professional training as a Chartered Accountant, I aim to provide clear, practical guidance that simplifies tax laws and supports better financial decisions.
Frequently Asked Questions
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What is the HSN code for health insurance?
Health insurance services are usually classified under service code 997133 which covers health and medical insurance for individuals and groups.
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Why is the HSN code important for insurance policies?
The correct insurance HSN code shows the exact nature of the policy and the GST treatment, which helps in applying the correct rate, claiming input tax credit where allowed and answering any questions from tax authorities.
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How is life insurance classified under HSN codes?
Life insurance products such as term plans and endowment plans normally fall under service code 997132, which is part of the broader heading 9971 for financial and insurance services.
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Are there different HSN codes for different types of insurance policies?
Yes. Separate codes exist for life insurance, health insurance, motor insurance and other general insurance products, and these should be used consistently in premium invoices and returns.
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How does HSN code affect insurance premiums?
The HSN code itself does not change the premium amount, but it determines the GST rate and the way tax is shown on the invoice. This affects the final amount payable and whether the buyer can claim input tax credit on the tax portion.