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.
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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.