GST on Medical insurance preimum
This query is : Resolved
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.
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.
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.
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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