Finance Minister Nirmala Sitharaman addressed the 57th GST Council meeting with state ministers and others and allowed employers to get ITC on GST paid for employee insurance cover.
At present, an 18% GST is imposed on all these group insurance policies.
Under the Goods and Services Tax (GST) law, individuals purchasing life or health insurance policies for themselves or their families are exempt from GST.
However, when a business purchases life or health cover for its employees, the cover attracts tax, and till then, the business cannot claim input tax credit (ITC) on it.
Employers can provide the insurance to employees because of its low cost.
Almost every organised employer provides coverage to their employees, thereby reducing the cost of providing such coverage; this should help expand coverage and benefit the insurance industry itself.
A committee of officers will be set up for the ITC claims; they will analyse how to safeguard a genuine buyer who has an accurate invoice, has received the goods, and has paid his supplier.
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The ministry stated that the committee of officials will complete its study within three months, and an agenda will be presented at the next council meeting.
