Can ITC be availed on GST paid on premium for Life insurance policies of employees ?
As per section 17(5)(b) of the CGST Act, entity is eligible to claim ITC of GST paid on life insurance premium, to extent it is statutory requirement for employer to provide to employee under any law for the time being in force.
Therefore ,Input Tax Credit is available only if employer is in obligation to contribute such amount of insurance otherwise not.
Employee Deposit Linked Insurance Scheme Act, 1976 requires employers to provide life insurance to their employees and applies to all employees to whom the provisions of Employees Provident Fund and Miscellaneous Provisions Act, 1952 are applicable. GST paid on such schemes would be eligible for the ITC.
Relevant case studies are as-
Case Law’s Under Service Tax Act: [2015] 1 SCC 605 (SC):
- Commissioner of Central Excise, Chandigarh vs. Reliance Industries Ltd. – This landmark case ruled that ITC of service tax paid on life insurance premiums paid by an employer for employees is permitted if it’s a mandatory benefit under a company’s service contracts.
- [2017] 90 VST 328 (Tribunal): M/s. Tata Communications Ltd. Vs Commissioner of Central Excise – This case further strengthened the claim for ITC on life insurance premiums paid by employers when it’s an obligatory contractual benefit for employees.
Krishnakant Jakhotia
