Page 9 - The Insurance Times November 2024

burden against such unexpected events. accessible, allowing everyone to enjoy Ind AS 117 had introduced a principles
The Firecracker insurance plan offers 10 the festivities safely." based approach, which may not have
days of coverage beginning from Octo- found favour with domestic insurance
ber 25th, 2024, at an affordable price MCA Postpones Imple- companies as it impinged on revenue
of just Rs. 9. The plan, which can be mentation of Ind AS 117 recognition, industry observers said.
purchased under a minute on the The MCA had, in August, notified the
PhonePe app, also provides comprehen- for the Insurance Sector
much awaited new accounting stan-
sive family coverage by insuring up to 4 In a huge relief for insurance compa- dard on 'Insurance Contracts' (Ind AS
family members, including the user, nies, the Corporate Affairs Ministry 117), setting the stage for a major
their spouse, and up to 2 children. If a (MCA) has put in abeyance implemen- overhaul of accounting practices in the
user makes the purchase after October tation of a key accounting standard insurance industry.
25th, then the policy cover will start (Ind AS 117) for insurance sector that
The new Accounting Standard (Ind AS
from the purchase date. This short-term had aligned India with global practices
117), which was made applicable from
coverage is tailored specifically to the with effect from April 1, 2024.
festive season, offering affordable and MCA has now notified that insurance April 1, 2024, substantially converged
timely protection to users. companies can provide their financial with the IFRS 17, which is now being
adopted by over 140 countries since
Commenting on the launch, Vishal statements as per Ind AS104 for con- January 1, 2023. The MCA move of Au-
Gupta, CEO at PhonePe Insurance solidated financial statements by their gust 2024 had brought Indian account-
Broking Services, said, "We are excited parent or investors or venturers till the ing standards closer to global stan-
to introduce PhonePe's Firecracker In- IRDAI notifies Ind AS 117. For this pur- dards.
surance just in time for the festive sea- pose, MCA has amended its Companies
son. This coverage offers essential pro- (Indian Accounting Standards) Rules The August 2024 notification of Ind AS
tection for families, ensuring they can 2015. 117 was based on the recommenda-
celebrate with peace of mind, free This, in effect, brings back an account- tions of the National Financial Report-
from concerns about accidents or un- ing framework for the insurance sec- ing Authority (NFRA), which is the
expected financial strain. Our goal is to tor that was done away with two country's sole independent audit regu-
make insurance both affordable and months back. lator. The latest Ind AS 117 had then
replaced the currently notified Ind AS
104 insurance contracts.
Reinsurance & Coinsurance Exempt from Tax Scope However, now, Ind AS 104 is back, with
Reinsurance and coinsurance are not the supply of a service and, hence, the MCA again notifying it on Septem-
not liable to tax, according to a decision by the Goods and Services Tax (GST) ber 28.
Council. This spells a significant breather to insurance companies facing Experts now see the latest MCA roll-
thousands of crores in tax demands.
back as a setback for India as its insur-
The GST Council also recommended clarifications on taxability of reimburse- ance sector will be non converged with
ments of securities or shares as employee stock option plans given by a IFRS17, which is currently being imple-
company to its workers. Officials said exemptions would be conditional and mented in over 140 countries.
notified later.
Amarjit Chopra, Past President, Insti-
Coinsurance, in this instance, refers to insurers sharing insurance-bearing tute of Chartered Accountants of India
liabilities. Reinsurance is the cover an insurer buys to insure itself through (ICAI), said: "It is unfortunate that
the payment of premiums. The industry has contended that GST should only IRDAI has not been able to decide the
be paid by one company in this chain. roadmap for implementation of Ind AS

However, the Directorate General of Goods and Services Tax Intelligence in insurance companies ever since Ind
(DGGI) last year issued notices to about 20 insurance companies raising tax AS was implemented in the country".
demands of about Rs 12,000 crore for non-payment of GST on coinsurance As regards deferment of Ind As 117,
and reinsurance premiums. one can well appreciate the difficulties
in its implementation due to various
Apex grouping General Insurance Council had lobbied the government, seek- reasons, particularly valuations to be
ing clarity. It submitted that the levy of GST on all firms amounted to double
done by actuaries. The systems may
taxation.
also require substantial changes to in-
8 November 2024 The Insurance Times