GST Payable On Medical Health Insurance Premium For Employees: AAR

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The Telangana Authority of Advance Ruling (AAR) consisting of B. Raghu Kiran and S.V. Kasi Visweswara Rao has observed that GST is payable on medical medical insurance premiums for workers.

The applicant, M/s. Hyderabad Metropolitan Water Supply and Sewerage Board, has paid medical insurance premiums to offer medical insurance to the workers, pensioners and their relations. The vehicle insurance policy was taken to offer insurance to the vehicles owned by the Board.

The applicant has sought an advance ruling on the difficulty of whether medical insurance premiums taken to offer medical insurance to the workers, pensioners and their relations are eligible for GST exemption.

Pure services provided “in relation to any function” entrusted to a municipality under Article 243W of the Structure of India are eligible for exemption from GST. Clearly, the exemption needs to be directly related to the functions enumerated under Article 243W of the Structure of India, i.e., those functions listed under the twelfth schedule.

The AAR noted that the applicant is procuring medical insurance services for its employees and their relations. Thus, there isn’t any direct relation between the insurance services procured by the applicant and the functions discharged by them under Article 243W read with Schedule 12 to the Structure of India. Due to this fact, these services don’t qualify for exemption under Notification No. 12/2017.

The AAR ruled that vehicle insurance policies procured by the applicant for the vehicles owned by the board qualify for exemption in the event that they are directly used to offer services under Schedule XII of the Structure. Nonetheless, in the event that they are used for transportation of employees, board members, or other people, they are going to not have a direct relationship to the functions discharged under Article 243W. Due to this fact, it should not qualify for exemption under Notification No. 12/2017.

Applicant’s Name: M/s. Hyderabad Metropolitan Water Supply And Sewerage Board

Citation: TSAAR Order No.28/2022

Dated: 03.06.2022

Click Here To Read/Download Order

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