Kerala HC Stays GST on Retiree Health Insurance, Allowing Renewal Sans Tax.
Issue
Whether the premium paid by retired employees for a group health insurance policy, which is merely facilitated by their former employer (the bank), constitutes a taxable “supply of service” liable to Goods and Services Tax (GST).
Facts
- Retired employees of the Union Bank of India were required to pay an 18% GST on the premium for the renewal of their group health insurance policy for the financial year 2025–26.
- The petitioners (retired employees) filed writ petitions in the Kerala High Court, challenging the legality of this GST levy.
- The core argument is whether this bank-facilitated insurance scheme for retirees, where the premium is paid by the retirees themselves, qualifies as a “supply” under the GST framework.
Decision
- The Kerala High Court granted interim relief to the retired employees.
- It stayed the levy of 18% GST on the premium payable for the renewal of the group health insurance policy for the current year.
- The court permitted the petitioners to renew their policies by paying only the base premium amount, excluding the GST component.
- This order is interim and subject to the final adjudication of the writ petitions.
Key Takeaways
- Immediate Relief: The interim stay provides immediate financial relief to the retirees, ensuring they can maintain their health insurance coverage without the 18% tax burden while the matter is legally examined.
- Questioning “Supply”: The case raises a fundamental question about what constitutes a “supply” in the context of post-retirement benefits. It scrutinizes whether a bank, by merely facilitating a group policy for its ex-employees, is part of a taxable supply chain.
- Wider Implications: This order signals increased judicial scrutiny of GST on employee welfare schemes, especially post-retirement benefits. The final outcome could influence the taxability of group insurance premiums across various industries.