Recovery of Top-Up Insurance / Parental Insurance Premium from Employees not covered under ‘Supply of Service’, No GST payable: AAR [Read Order]

Recovery of Top Up InsuranceParental Insurance Premium from employees - supply of service - AAR - Taxscan

The Maharashtra Authority of Advance Ruling (AAR) ruled that recovery of Top Up Insurance/Parental Insurance Premium from employees not covered under “supply of service”so no GST payable.

The applicant, Tata Power Company Ltd. has an arrangement with New India Assurance Co. Ltd. for providing insurance cover for its employees, in pursuance of which, the insurance company issues a master insurance policy to the applicant for providing group insurance to the applicant’s employees.

The applicant has formulated a ‘Health & Wellness Policy’ for the welfare of its employees under which, its employees can opt for an additional insurance (hereinafter referred to as “Top-up Insurance”) apart from the insurance cover provided under the group insurance. Therefore, the applicant has taken a ‘Top-up policy’ from the insurance company. The said policy contains the number of employees who have opted for such top-up insurance.

Under the Insurance cover provided to employees under the Group Insurance policy, the employee is only eligible to claim the expenses incurred for medical treatment availed in respect of his own health. As per the ‘Health & Wellness Policy of the applicant, the employees have an Option to include their parents under such policy.

The applicant has sought the advance ruling on the issue whether the recovery of an amount towards Top-up and parental insurance premium from the employees, amounts to a supply of any service under Section 7 of the Central Goods & Service Tax Act, 2017.

The coram of Rajiv Magoo and T.R.Ramnani ruled that the recovery of the Top Up Insurance/Parental Insurance Premium from employees does not amounts to “supply of service” under Section 7 of the Central Goods and Service Tax Act, 2017.

Subscribe Taxscan Premium to view the Judgment

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.

taxscan-loader