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.
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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.
Insurance HSN Code Classification and GST Rates
Here are some commonly used HSN codes and GST rates for this category
4 Digit SAC Code Classification
| HSN/SAC Code | HSN/SAC Code Title | GST Rate |
|---|---|---|
| 9971 | Other Financial and related services | 18% |
| 9991 | Services provided by a partnership firm of advocates or an individual as an advocate other than a senior advocate, by way of legal services to"(iii) the Central Government, State Government, Union territory, local authority, Governmental Authority or Government Entity; | 0% |
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6 Digit SAC Code Classification
| HSN/SAC Code | HSN/SAC Code Title | GST Rate |
|---|---|---|
| 997119 | Other financial services (except investment banking, insurance services and pension services) | 18% |
| 997132 | Life insurance services (excluding reinsurance services) | 18% |
| 997133 | Accident and health insurance services | 18% |
| 997134 | Motor vehicle insurance services | 18% |
| 997135 | Marine, aviation, and other transport insurance services | 18% |
| 997136 | Freight insurance services & Travel insurance services | 18% |
| 997137 | Other property insurance services | 18% |
| 997139 | Other non-life insurance services (excluding reinsurance services) | 18% |
| 997141 | Life reinsurance services | 18% |
| 997142 | Accident and health reinsurance services | 18% |
| 997143 | Motor vehicle reinsurance services | 18% |
| 997144 | Marine, aviation and other transport reinsurance services | 18% |
| 997145 | Freight reinsurance services | 18% |
| 997146 | Other property reinsurance services | 18% |
| 997149 | Other non-life reinsurance services | 18% |
| 997161 | Insurance brokerage and agency services | 18% |
| 997162 | Insurance claims adjustment services | 18% |
| 997169 | Other services auxiliary to insurance and pensions | 18% |
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* GST rates may vary based on the latest GST notifications
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.
