- Published On Oct 12, 2026 at 07:43 AM IST
The GST Council‘s decision on insurance can make employee protection more affordable, according to experts on Friday.
The Council, in its 57th meeting held on Thursday, cleared a proposal to permit employers to claim input tax credit on premiums paid for insurance coverage provided to employees.
The move to allow employers to avail input tax credit on GST paid towards employee group health insurance marks a significant step towards making group health coverage more economically viable and can translate into deeper penetration of employer-sponsored health insurance in the country, Generali Central Insurance MD and CEO Krishnamoorthy Rao said.
The availability of ITC could ease the effective cost of coverage for employers, creating greater headroom to sustain adequate pricing while also enabling companies to enhance benefits, coverage limits and employee eligibility, he said in a statement.
According to Mahindra Manulife Insurance MD and CEO Suresh Agarwal, allowing employers to claim input tax credit on GST paid on group life insurance can make employee protection more affordable and strengthen financial security.
While group term cover is an established benefit in the organised sector across India, there is considerable scope to expand its reach and improve coverage adequacy, Agarwal added.
The provision allowing input tax credit (ITC) on employee health insurance expenditure incurred by employers is a welcome step, the Internet and Mobile Association of India (IAMAI) said in a statement.
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.
It is to be noted that the GST Council approved a sweeping overhaul of tax administration, removing GST officers’ power to arrest taxpayers, raising the threshold for criminal prosecution to Rs 5 crore, and providing a faster 3-day refund for most claims.
The proposed simplification of GST registration for e-commerce sellers could reduce compliance burdens, expand market access and enable more small businesses to participate in India’s digital economy, it said.
Similarly, it said, faster ITC refunds through greater automation and shorter processing timelines could ease working capital constraints and improve cash flows.
- Published On Oct 12, 2026 at 07:43 AM IST
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