Go AD-Free with CAclubindia Pro and Daily WhatsApp Updates. Subscribe Now!

GST allowed on Employee Insurance

323 views

Save Share

Nivesh tater

Tax Executive at Mazars India Bangalore

205 Points Posted on 14 June 2020

The Vampire section in GST, yes section 17(5), which restricts ITC, in a way vampire sucks blood!

Wherein, it restricts ITC on rent-a cab, life insurance and health insurance EXCEPT when;

Govt notifies the service which are obligatory for employer to provide to its employees under ANY LAW for the time being in force.

It is to be noted that under the Disaster Management Act, 2005, the Government vide it's order no 40-3/2020-DM-I(A) dated 15th April, 2020, under Annexure II mandated the employer to provide special transportation facility and Medical insurance to its employees MANDATORILY.

Under this situation the ITC could be availed. In order to ensure, do submit written representation to the Jurisdictional officer to avoid any confusion.

And most importantly do follow @ gstgist on Instagram for regular updates on GST 😁

Replies (5)

Quick Summary

This discussion clarifies the eligibility of GST input tax credit (ITC) on employee insurance, particularly concerning Section 17(5) of the GST Act, often dubbed the 'Vampire Section'. While ITC is generally restricted for services like life and health insurance, it can be claimed if the employer is legally obligated to provide these benefits under specific laws, such as the Disaster Management Act. The thread also addresses scenarios involving insurance for employee-owned cars versus employer-owned vehicles, advising caution and suggesting written representations to tax authorities for clarity.

Shivam RC

Student

23693 Points Posted on 14 June 2020

Thanks for the useful update @ Nivesh Sir...
I like the name of Section 17(5) - Vampire Section...🤣🤣🤣

KRISSHNAN KP

4215 Points Posted on 15 June 2020

Useful information

vijay sai

29 Points Posted on 06 August 2020

Sir ,if the employer provides insurance to employees own car,can employer claim input tax credit on paid vehicle insurance,
pls suggest me with reference to the respective section.

Nivesh tater

Tax Executive at Mazars India Bangalore

205 Points Posted on 07 August 2020

I would reply to your query as :

Scenario 1- If car owned by Employees and car insurance service provided by employer : Since it cannot be said that it is used in the course or furtherance of business. Not eligible under 16(1) of CGST Act

Scenario 2- If car is owned by employer and car insurance services provided by employer, then also ITC is blocked under 17(5)(ab) of CGST Act.