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Taxation Central Ministry of Finance Central Goods and Services Tax Act, 2017

Clarification on taxability of salvage/ wreck value earmarked in the claim assessment of the damage caused to the motor vehicle

26-Jun-2024 | Circular No.-215/9/2024-GST

Ministry of Finance has issued Clarification on taxability of salvage/ wreck value earmarked in the claim assessment of the damage caused to the motor vehicle. By virtue of this notification it is clarified that in cases where due to the conditions mentioned in the contract itself, general insurance companies are deducting the value of salvage as deductibles from the claim amount, the salvage remains the property of insured and insurance companies are not liable to discharge GST liability on the same. However, in cases, where the insurance claim is settled on full claim amount, without deduction of value of salvage/ wreckage (as per the terms of the contract), the salvage becomes the property of the insurance company and the insurance company will be obligated to discharge GST on supply of salvage to the salvage buyer.

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