To qualify for a refund, NRIs must pay premiums through their Non-Resident External Bank Account - This means he has to pay premiums via NRE, although they may choose to pay the premium in Indian rupees or foreign currency also
If you are a Non-Resident Indian (NRI), you can claim back the Goods and Services Tax (GST) refund on your insurance premium. That is a super saving of 18 per cent, which is levied on residents. This refund can help NRIs reduce tax liabilities while ensuring financial protection for their families in India.
The GST refund benefit for NRIs is applicable to both health insurance and term life insurance premiums in India, provided specific conditions are met.
“As under sub-clause (iv) of Section 2(6) of the Integrated Goods and Services Tax (IGST) Act, the payment made by NRIs on life insurance premium payment is considered as export of service, hence is eligible for refund. However, this benefit does not apply to the ULIP premium,” says Abhishek Kumar, a Securities and Exchange Board of India (Sebi)-registered investment advisor (RIA), and founder and chief investment advisor of SahajMoney, a financial planning firm.
Eligibility Criteria For GST Refund
But this refund is also based on certain conditions. “The specifics & qualifications for insured members can differ from one insurer to another, but most steps are standard,” says Madhupam Krishna, Securities and Exchange Board of India (Sebi) registered investment advisor (RIA) and chief planner, WealthWisher Financial Planner and Advisors.
Required Documentation And Compliance
To qualify for a refund, NRIs must pay premiums through their Non-Resident External Bank Account (NRE) - this means he has to pay premiums via NRE, although they may choose to pay the premium in Indian rupees or foreign currency also. “The NRI policyholder needs to buy insurance for himself or his family members back in India. NRI must be one of the persons covered in the policy. The insurer must be GST-registered, and the transaction must comply with GST regulations. The refund can be claimed by the NRIs within the same month or year they pay the health insurance premium,” says Krishna.
A Tax Residency Certificate (TRC) needs to be provided by the policyholder for the GST refund. TRC is an official document issued by the government of the country in which the assessee claims to be a resident. A non-resident is required to produce a tax residency certificate (TRC), which states their country of residence from the home country if they wish to claim tax relief. A tax residency certificate is a document that enables Indian residents to enjoy tax relief under the Double Tax Avoidance Agreement (also known as DTAA).
He also needs to provide international address proof (for international address proof, acceptable documents include a utility bill, driver’s license, bank statement, or a government ID card/certificate) NRI must also furnish basic KYC documents, which include their Passport; PAN card, a recent photograph; premium payment proof (last six months; NRE account statement). Few insurance companies ask for a declaration, for which they would provide the format.
Refund Process And Timelines
The refund process starts with choosing a GST refund option while purchasing the policy. Also, it's important to make the premium payment through an NRE account. For the same, you must submit the required documents to the insurer after policy issuance.
“Most insurers have an online process to submit the required documents, barring Life Insurance Corporation, which requires NRIs to physically go to the LIC branch to complete the process, making it a taxing one for NRIs,” says Krishna.