The GST Council will consider a proposal on October 7 to allow employers to claim input tax credit on employee insurance premiums. Currently, businesses pay 18 percent GST on these policies without getting credit. Sources said, "This will make insurance cheaper for every employer to provide" to their entire workforce.
The GST Council is gearing up to consider a proposal regarding input tax credit for employee insurance premiums. Currently, businesses cannot claim input tax credit on insurance policies purchased for their employees. An 18 percent GST is imposed on these group insurance policies, impacting business expenses.
New Delhi: The GST Council is expected to consider a proposal in its meeting on October 7 to allow employers to claim input tax credit on premiums paid for insurance coverage provided to employees.
Under the Goods and Services Tax law, GST is exempt on individuals buying life or health policies for themselves or their family.
However, when a business buys life or health cover for its employees, tax is charged on that cover, and until now the business could not claim ITC on it.
Currently, an 18 per cent GST is levied on all such group insurance policies.
The GST Council will now consider a proposal to allow businesses to claim credit for buying insurance cover for employees. "This will make insurance cheaper for every employer to provide", sources said.
Almost every organised employer provides cover for its workforce, so the cost of providing the coverage comes down, which should assist the spread of cover and the insurance industry itself, sources added.