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Can GST ITC be claimed on Medical Insurance?

Sai Ratnakar Annam 
on 29 July 2020

LinkedIn


Based on the MHA orders issued, a conclusion can be drawn as follows:

  • GST ITC can only be claimed for the Medical insurance taken during the period from 15/04/2020 to 17/05/2020
  • But for the period outside these dates, ITC can’t be claimed
Can GST ITC be claimed on Medical Insurance

(Detailed explanation and links to the orders are provided below)

MHA-order-dt-15.04.2020-with-Revised-Consolidated-Guidelines

MHA Order No. 40-3/2020-DM-I (A) dated 15th April 2020:

Medical insurance for the workers to be made mandatory Under Standard operating procedure for social distancing for Offices, Workplace, Factories, and Establishments as stated in Clause No. 5 of Annexure-II.

MHA Order No. 40-3/2020-DM-I (A) dated 17th May 2020:

"Whereas, save as otherwise provided in the guidelines annexed to this Order, all Orders issued by NEC under Section 10(2)(1) of the Disaster Management Act, 2005, shall cease to have effect from 18.05.2020”;

The guidelines annexed with the order do not include mandatory medical insurance to be provided by the employer, which was present in the earlier guidelines, Therefore as per the order dated 17/05/2020 such guideline ceases to exist with effect from 18/05/2020

MHAOrderextension_1752020

 

Before these Orders:

As per section 16 of CGST Act, 2017:

"Where the Goods or Services are used or intended to be used in furtherance of business by a registered person then the registered person is eligible to avail input tax credit against such purchase”

However, GST Input tax credit can’t be claimed under section 17(5) (b) blocked credit on:

Rent-a-cab, life insurance and health insurance except where -

(A) The Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or

(B) Such inward supply of goods or services or both of a particular category is used by a registered person for making outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply

*since there is no statutory obligation for the employer to provide medical insurance to their employees under any law earlier, hence Input Tax Credit can’t be claimed

After these Orders:

Now that Government has made it mandatory for the employer to provide medical insurance to its employees as per order stated below, GST Input Tax Credit can be claimable for the period – (15/04/2020 -17/05/2020)

*Note: Government has mandated medical insurance but not health insurance, Health insurance includes medical insurance but not vice-versa

 

Disclaimer: The contents of this article are solely for information and knowledge and do not constitute any professional advice or recommendation. The author does not accept any liability for any loss or damage of any kind arising out of this information set out in the article and any action taken based thereon.


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Other Articles by - Sai Ratnakar Annam 




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