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GST Council to Consider Input Tax Credit on Employee Insurance Premiums
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CNBC TV18•05-10-2026, 08:12
GST Council to Consider Input Tax Credit on Employee Insurance Premiums
- •The GST Council will discuss allowing 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 life or health insurance policies for employees.
- •This proposal, if approved, would make employee insurance cheaper for employers, potentially boosting insurance penetration.
- •The decision is expected to be considered at the GST Council meeting on October 7.
Key Questions Answered
The GST Council is expected to consider a proposal allowing employers to claim input tax credit on the 18% GST paid for group health and life insurance policies provided to their employees.
Under current Goods and Services Tax laws, while individual life or health policies are exempt, businesses buying group insurance cover for employees face a tax on that cover, and input tax credit on such insurance is generally restricted.
Allowing input tax credit will make providing insurance cheaper for employers, reduce coverage costs for the organized workforce, and assist the broader insurance industry.
