The Court clarifies that GST exemptions under the 2025 notification are limited to individual health insurance policies, excluding group policies, despite collective bargaining advantages.
In a significant ruling, the Kerala High Court has denied the plea of retired bank employees seeking Goods and Services Tax (GST) exemption on group health insurance premiums. The judgment, delivered by Justice Ziyad Rahman A.A., firmly establishes that GST exemptions under Notification No. 16/2025-Central Tax (Rate); G.S.R. 666(E) dated September 17, 2025, apply exclusively to individual health insurance policies, including family floater and senior citizen policies, and not to group insurance policies.
The case was brought forward by retired employees of various banks who are members of group health insurance policies issued by the National Insurance Company Limited. These petitioners argued that their group policies should be exempt from GST based on the said notification, which they believed allowed such exemptions. However, the insurer and the respective banks insisted on GST payment, prompting the writ petitions.
In its judgment, the Court clarified that the GST exemption is specifically restricted to individual policies, as evident from the GST Council's recommendations in its 56th meeting. The notification clearly states that the exemption is applicable to contracts of insurance where the insured is an individual or a family. Group insurance policies, even if beneficial, do not qualify for the exemption, as they represent a collective arrangement rather than individual coverage.
The Court further elucidated that the group insurance policies in question were negotiated by the Indian Banks Association and are characterized by reduced premiums and other benefits obtained through collective bargaining. These advantages, while beneficial, do not align with the criteria for GST exemption outlined in the notification.
Moreover, the judgment emphasized that the definition of 'group' in the notification refers to a collection of individuals with a commonality of purpose beyond merely obtaining insurance. The Court pointed out that the group policies for retired bank employees, formed under the guidance of the Insurance Regulatory and Development Authority of India (IRDAI) regulations, do not meet the exemption criteria as they are structured through collective negotiation and not merely for availing insurance.
The decision reinforces the principle that fiscal exemptions must be strictly construed, and any ambiguity in exemption provisions should favor the state. The judgment serves as a crucial reference point for understanding the scope of GST exemptions for insurance policies under current regulations.
Bottom Line:
Goods and Services Tax (GST) exemption - Group health insurance policies issued to retired bank employees are not entitled to GST exemption under Notification No.16/2025-Central Tax (Rate); G.S.R. 666(E) dated 17.9.2025, as the exemption applies only to individual health insurance policies.
Statutory provision(s): Goods and Services Tax Act, 2017, Notification No. 16/2025-Central Tax (Rate); G.S.R. 666(E) dated 17.9.2025, IRDAI (Insurance Regulatory and Development Authority of India) Regulations.
E.P. Gopakumar v. Union Of India, (Kerala) : Law Finder Doc Id # 2834933
