QUESTION
One of my client has taken fire and earthquake insurance policy on factory building, plant and machinery and all fixtures, the insurance company has charged GST on total policy by giving break-up of inusred amount seperately on Building structure, plant and machinery, stock and fixtures. My Query is whether credit of GST is availble on entire policy or amount of building should be deducted, because as per Sec.17 pf CGST Act, 2017, the credit of services is also restricted, so please advise at an early date on my E-mail: nareshpnd3 @gmail.com. Thanks

ANSWER

Facts of the Case: Fire and Earthquake insurance policy has been taken for Factory Building, plant and machinery and all fixtures.

Law Applicable: SECTION 17 OF CGST ACT
(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:-

(b) the following supply of goods or services or both-
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or  aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance:

Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;
(ii) membership of a club, health and fitness centre; and
(iii) travel benefits extended to employees on vacation such as leave or home travel

Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.'.

Interpretation: ITC is blocked under Section 17(5), however it nowhere blocks ITC on fire and earthquake insurance. Hence you are eligible for ITC of GST paid on Fire and Earthquake insurance policy taken for Factory Building, plant and machinery and all fixtures.

Conclusion: ITC is eligible for Fire and Earthquake insurance policy taken for Factory Building, plant and machinery and all fixtures.