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Employers May Soon Claim ITC on GST Paid for Employee Insurance Cover
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News18•04-10-2026, 19:30
Employers May Soon Claim ITC on GST Paid for Employee Insurance Cover
- •The GST Council is set to consider a proposal on October 7 to allow employers to claim input tax credit (ITC) on premiums paid for employee insurance coverage.
- •Currently, businesses cannot claim ITC on the 18% GST levied on group insurance policies purchased for employees, even though GST is charged on these covers.
- •If approved, this change would make employee insurance cheaper for employers, potentially increasing the spread of coverage and benefiting the insurance industry.
- •While individuals buying insurance for themselves or family are exempt from GST, businesses providing it for employees currently pay GST without ITC.
Key Questions Answered
The GST Council is expected to consider a proposal in its meeting on October 7 to allow employers to claim input tax credit on GST paid for employee insurance coverage.
Currently, an 18 percent GST is levied on group health and life insurance policies procured by businesses for their employees.
Allowing input tax credit will make providing insurance cheaper for employers, lower the overall cost of coverage, and assist in spreading insurance coverage while supporting the insurance industry.
