The Maharashtra bench of the Authority for Advance Ruling ( AAR ) in an application filed by Jotun India Pvt. Ltd. held that the recovery of 50% of the Parental Health Insurance Premium from employees does not amount to supply of service.
The applicant seeks a ruling on whether a recovery of 50% of Parental Health Insurance Premium from employee amounts to the supply of services under Section 7 of the CGST Act.
The applicant has contended that the applicant has paid the entire premium to the insurance company and further recovered 50% of the insurance premium amount from the employees and balance 50% premium is borne by himself. The said service was given ‘in the course of’ or ‘in relation to’ his ‘employment’ and are not in the course or furtherance of business.
The Bench constituting of Members Shri B. Timothy and A.A. Chahure held that the recovery of 50% of the Parental Health Insurance Premium from employees does not amount to supply of service under Section 7 of the CGST Act.
The Bench held that the applicant is not engaged in the ‘business’ of providing insurance coverage. Further, provision of parental insurance cover is not a mandatory requirement under the present laws and not provision of the same shall not affect the applicant’s business in any way. Hence, the activity in question cannot be treated as an activity done in the course of business or in furtherance of business.
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