New Delhi: AAR specifies the amount of GST to be paid on employee health insurance premiums. Businesses, including corporations, would be liable for goods and services tax on health insurance premiums paid by their employees.
Even municipalities and other statutory entities that enjoy tax exemption on different services they provide have to pay GST on health insurance premiums for employees, according to the Telangana Advance Ruling Authority (AAR). Read more: Want to update the Aadhaar map at home? It will soon become reality
The Telangana AAR decision came in response to a request from M/s. Hyderabad Metropolitan Water Supply and Sewerage Board, which wanted to know if it was liable to pay GST on medical insurance premiums paid to provide health insurance to employees, pensioners and their family members. Read more: LIC Jeevan Umang Policy: Here’s how to get Rs 36,000 pension by saving Rs 45 per day
The application also requested a prior judgment on the taxation of the automobile insurance policy taken out to cover the Commission’s vehicles. The AAR has determined that services provided by a municipality are eligible for GST exemption under Section 243W of the Indian Constitution. These services are directly related to the functions set out in Annex 12 for these organizations.
The AAR concluded that the insurance services purchased by the plaintiff were unrelated to his activities under Section 243W and, therefore, such services were not eligible for exemption. The AAR has determined that premiums paid for auto insurance are excluded if the vehicle is used to discharge statutory responsibilities assigned to municipalities.
These vehicles will have no direct connection to the duties undertaken under Section 243W if they are used to transport employees, board members or other persons. Therefore, the AAR concluded that he would not qualify for the exemption.