Employers May Soon Be Able to Claim ITC on GST Paid for Employee Insurance

The GST Council is anticipated to examine a proposal on October 7 that would enable businesses to claim input tax credit on premiums paid for employee insurance coverage.

People who purchase health or life insurance policies for themselves or their family are exempt from GST under the Goods and Services Tax legislation. But, if a company purchases health or life insurance for its workers, tax is assessed on the coverage, and the company was previously unable to get ITC on it.

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The GST Council will take into consideration a request to let businesses deduct the cost of insurance coverage for their workers. Sources also mentioned that since nearly every organised employer offers coverage for their staff, the expense of offering the coverage decreases, which should help to promote the growth of cover and the insurance sector itself.

STORY | Employers may soon be able to claim ITC on GST paid for employee insurance cover 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. READ: https://t.co/0sjuqZRsoW — Press Trust of India (@PTI_News) October 4, 2026

Employers currently pay 18 percent GST on group health and life insurance for employees but cannot claim ITC on the tax paid in most cases. The GST Council may also think about offering ITC relief on motor vehicles leased, rented or hired. The GST Council meeting is anticipated to address these concerns.