Clarification on ITC for Motor Vehicle Repairs by Insurance Companies

Insurance companies can claim Input Tax Credit (ITC) on repair expenses for motor vehicles, whether settled through Cashless or Reimbursement modes. For Reimbursement mode, where repairs are paid by the insured and then reimbursed by the insurer, ITC is still available if the invoices are issued to the insurer.

If the garage issues two invoices—one to the insurance company for the approved amount and another to the insured for additional costs—the insurer can claim ITC only on the invoice for the approved amount reimbursed to the insured.

ITC is not available if the repair invoice is not issued in the insurer’s name, as it does not meet the conditions required under GST law.