High court pauses GST claims against insurers
Jan 23, 2026
Grants interim protection to leading insurers in GST dispute over co-insurance payments
The Bombay High Court (HC) has temporarily protected a group of major insurance companies from paying disputed GST on certain insurance-related transactions.
The companies involved include Aditya Birla Health Insurance, SBI General, ICICI Lombard, Oriental Insurance, TATA AIG, IFFCO Tokio, Generali, Universal Sompo, Zuno General, IndusInd General Insurance and Bharti Management Services.
Legal dispute over co-insurance payments
The dispute relates to co-insurance premiums and ceding commissions – payments insurers make to each other when sharing the risk of insuring large clients or policies. The GST authorities sought to tax these payments. However, the insurance companies argued that the demand contradicts official circulars issued by the Central Board of Indirect Taxes and Customs (CBIC) in October 2024 and January 2025. These circulars, based on decisions of the GST Council, clarified that such payments should not be treated as taxable under GST.
The insurers also pointed out that in similar cases in cities such as Meerut, Delhi, Pune and Mumbai, the government had already dropped GST demands, indicating inconsistent application of the rules.
Court directions and next steps
After hearing Senior Advocates Arvind Datar and Rohan Shah, the HC granted ad-interim protection, meaning the companies are not required to pay the disputed GST for now, until the matter is examined in detail. The next hearing is scheduled for February 18.
The court also directed the GST authorities and the Union of India to file their replies by February 12, ensuring that both sides have an opportunity to present their arguments before a final decision.
The case is significant as it concerns the taxation of insurance companies under GST, particularly co-insurance arrangements that are common across the industry. The final ruling could set a precedent for the treatment of such payments, with implications for insurers nationwide. For now, the high court has paused the GST demand, granting interim relief while the dispute awaits final adjudication in February 2026.
[Mumbai Mirror]
