The Council recommended amendment in section 17(5) of the CGST Act, 2017 to remove the restrictions on availment of ITC inter-alia on… health and life insurance.
The move could particularly benefit small businesses and make group health insurance more affordable, while giving employers greater flexibility to expand coverage and also improve employee benefits, insurance industry experts said.
“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,” said Krishnamoorthy Rao, MD & CEO, Generali Central Insurance.
He said insurers would need to ensure that the benefit translates into sustainable growth rather than simply triggering further price competition.
The decision would address the tax disparity between individual and employer provided insurance.