Bombay HC Grants Interim Stay on Rs 10,000 Crore GST Demand for Insurance Sector

• The Bombay High Court has provided significant relief to insurance companies by imposing an interim stay on GST notices and recovery proceedings exceeding Rs 10,000 crore.
• The dispute centers on GST levied on co-insurance premiums and seeding commissions, which tax authorities consider separate services subject to GST.
• Thirteen major insurance companies, including New India Assurance, ICICI Lombard, and SBI General, had filed petitions challenging the demand.
• Insurance companies argue that co-insurance and re-insurance are integral to the insurance mechanism, not separate taxable services.
• CBIC circulars from October 2024 and January 2025, based on GST Council recommendations, clarified that GST would not apply to these premiums and commissions.

Why It Matters: Bombay HC temporarily halts Rs 10,000 crore GST recovery, providing crucial relief to the insurance sector.