GST on Medical insurance preimum

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This query is : Resolved

Sonu Khandare (Querist)

07 February 2025 Dear All

If holding company is taking group insurance policy of employees of subsidiary company and billing the same to subsidiary , then whether on the bill charged by Holding to subsidiary , GST is applicable?

Thanks in advance.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

12 August 2025 Scenario:
Holding company buys group medical insurance policy covering employees of subsidiary.

Holding company charges the insurance premium cost to subsidiary.

GST Applicability:
Insurance premium paid to insurer:

Insurance premium itself is exempt from GST as per GST law (health insurance is exempt).

Reimbursement or recharge by holding company to subsidiary:

If holding company is only passing the insurance premium cost without any markup, this is considered a reimbursement.

Reimbursements are generally not treated as supply under GST and no GST is chargeable if the cost is merely passed on without margin.

However, if the holding company adds a service fee, administrative charges, or markup, then GST is chargeable on that amount.

If holding company is providing any additional services (like handling claims, admin services) along with recharge:

GST is applicable on the value of such services provided.

Summary:
Situation GST Applicability
Pure pass-through/reimbursement No GST (if no markup or service fee)
Recharge with markup or admin fee GST applicable on markup/fee
Additional service by holding co. GST applicable on service value

Note:
Proper documentation and agreements between holding and subsidiary should clearly state the nature of the transaction.

If it's just cost pass-through, maintain evidence to avoid GST demand.

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