GST Council to Consider Allowing Employers Input Tax Credit on Employee Insurance Premiums
The GST Council will discuss a proposal on October 7 that could let businesses claim input tax credit for group life or health insurance premiums paid for employees.
Under existing GST rules, group life or health insurance bought by an employer for its workforce attracts an 18 % tax, which the business cannot offset against its own tax liability. A proposal slated for the GST Council's October 7 session seeks to reverse this by allowing input tax credit on those premiums. If approved, the cost of employee insurance would drop, making it more affordable for employers to extend coverage.
The change is expected to broaden insurance uptake among organized employers and boost the insurance industry's market. Officials indicated the amendment aims to reduce the financial burden on businesses while expanding employee benefits.
Why it matters
It could reduce insurance costs for employers and increase coverage for workers across India.
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