the essay of 14 January 2026 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=utf-8"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><strong><font color="#663399" face="Verdana, Arial, Helvetica, sans-serif" size="2">JANAUARY 14, 2026</font></strong></p> <p align="center"><font color="#FF6633" face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong> GST - Group Insurance - No Exemption</strong></font></p> <p align="justify"><u><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2">By Vijay Kumar</font></strong></u></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><strong>INSURANCE</strong> covers risks, not exemptions. GST, however, is the one premium no one escapes. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Notification No. <strong><a href="https://taxindiaonline.com/gst/details?id=34320&view=notification&type=notification&type=notification" target="_blank">16/2025-Central Tax (Rate)</a> </strong>dated 17th September 2025, exempts (from the 22nd of September, 2025), <em>Services of health insurance business provided by an insurer to the insured, where the insured is not a </em></font><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#f3dbcf"><em><strong>group</strong></em></font><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><em>. For removal of doubts it was clarified that this exemption shall apply to a contract of insurance where the insured is an<strong> individual</strong>, or an individual and family of the said individual. </em></font></p> <p align="justify"><font color="#ff0000" face="Verdana, Arial, Helvetica, sans-serif" size="2">Group</font><font face="Verdana, Arial, Helvetica, sans-serif" size="2"> has been defined as: </font></p> <blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><em>'group' means group of persons who join together with a commonality of purpose or for engaging in a common economic activity, other than availing insurance, and includes: </em></font></p><blockquote><p align="justify"><em><font face="Verdana, Arial, Helvetica, sans-serif" size="2">a. Employer- employee groups, where an employer-employee relationship exists between the master/group policyholder and the members of the group in accordance with the applicable laws; </font></em></p><p align="justify"><em><font face="Verdana, Arial, Helvetica, sans-serif" size="2">b. Non employer- employee groups, where a clearly evident relationship exists between the master/group policyholder and the members of the group, for services/ activities other than insurance. </font></em></p></blockquote></blockquote> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">This exemption is available only to individuals. Why not to groups? Well, why not? That was the question before the Kerala High Court last week. [WP(C)No. 38316/2025] The petitioners were retired employees of various Banks and the members of group health insurance policies issued by the <em>'National Insurance Company Limited'</em>. The policy (2024-25) covers 5,75,166 serving and 1,51,668 retired employees. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The petitioners contend: </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#f3dbcf">Not Really a Group </font></p> <blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">1. Even though the notification would convey a primary impression that it is not applicable to the group insurance policies, considering the definition of 'group' therein, a different conclusion is possible. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">2. Going by the definition, the group referred to, is in respect of persons, who joined together with a commonality of purpose or for engaging in a common economic activity, other than availing insurance. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">3. They have joined together, only for the purpose of availing the insurance and apart from that, there was no commonality of purpose or they have not engaged in common economic activity. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">4. Therefore, the petitioners, though availed the policy as a group, would not fall under the 'group' as defined in the notification and hence, the exclusions in it cannot be made applicable to the petitioners. </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">5. Thus, the petitioners are entitled to the benefits of exemption as per the Notification. </font></p></blockquote> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The Insurance Companies stoutly opposed the reliefs sought by the petitioners pleading that: </font></p> <blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The <em>Insurance Regulatory And Development Authority of India (Health Insurance) Regulations, 2016</em>, contemplated that no group health insurance policy shall be issued by any insurer, wherein, group is formed with the main purpose of availing itself of insurance. There shall be a clearly evident relationship as specified by the Authority from time to time between the members of the group and the group policy holder. </font></p></blockquote> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Will the Retired Bank officers qualify as a group? </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">The High Court observed: </font></p> <p align="justify"><font color="#cc3333" face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#f3dbcf">Collective Bargaining ? Individual Policy - <strong> <a href="https://taxindiaonline.com/searchcaselaw/details?id=191082&type=caselaw&keyword=null">2026-TIOL-92-HC-KERALA-GST </a></strong></font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">1. The Notification is intended to be made applicable to the individual health insurance policies alone. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">2. This fact is reiterated in the explanation therein. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">3. The respondents argued that these policies bore all the hallmarks of group insurance policy, as the same covers a large number of persons who are retired employees of the banks, who by themselves form a class, and the benefits of the same were obtained by way of collective bargaining, thereby getting reduced rates. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">4. Yet another point of the respondents is that, as per Regulation 3(5) of Chapter 1 of 'IRDAI (Insurance Products) Regulations, 2024', "group" consists of persons who join together with a commonality of purpose or engaging in a common economic activity. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">5. Therefore, the issuance of policy by following the regulations of IRDAI itself would indicate that the said policy was issued to a group, where there is an evident relationship between the members of the group and the policyholder. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">6. The policies are obtained by the Indian Banks' Association through collective bargaining. The benefits of the said collective bargaining are: </font></p> <blockquote><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">a. Cost Savings Passed to Members, </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">b. Lower Premiums, </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">c. Minimal or No Medical Underwriting, </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">d. Coverage for Pre-existing Conditions, </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">e. Family Coverage, </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">f. Voluntary Top-up Options, </font></p><p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">g. Streamlined Administration. </font></p></blockquote> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">7. Clearly, the petitioners enjoyed these advantages-marking a sharp distinction between individual and group policies. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">8. According to the petitioners the specific inclusion of the words <em>"other than availing insurance"</em> is very important and by virtue of inclusion of the said clause in the definition of 'group' in the Notification, the groups, which are formed together only for the purpose of availing the benefit of insurance should be exempted. It is to be noted that, going by the Regulations of the IRDAI, there is no policy contemplated for a group which is formed for the sole purpose of availing the insurance and there must be a relationship between the members of the group and the policy holder. The policy in this case was issued in terms of the IRDAI Regulations and therefore that by itself is a certification of the fact that it was a policy issued to a group, as defined under the provisions of the IRDAI Regulations and therefore, the fact that, in the definition of 'group' included in the Notification contains a clause that<em> "other than availing insurance"</em>, would not make a difference. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">9. The scheme of insurance policy itself was introduced as part of 10th Bipartite Settlement/7th Joint Note dated 25.5.2015 and later the benefits were extended to the retired employees. A detailed procedure is followed by the Indian Banks' Association, which floated a tender to find out an insurer who can provide a better package at a lesser price. Rates of premium were also fixed after such negotiations/proceedings between the Indian Banks Association and the Insurance Company. Thus, the Indian Banks Association, for all practical purposes, was acting as an intermediary and after a collective bargaining, better rates of premium were fixed with additional benefits, which were not otherwise available for individual policyholders. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">10. This particular policy is issued for the welfare of the retirees from various banks who by themselves formed into a class, on account of their prior employment with the banks. Thus, there is a commonality of purpose behind the join together of the members of the Association and the Indian Banks Association, which is bound to ensure the welfare of the retired employees of the banks, while extending the benefits of group insurance policy. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">11. The decisions of the Supreme Court in Achal Industries and T.S.Devinatha Nadar were relied on to show that, when there is a doubt as to the meaning of a provision in fiscal statute, it must be construed in favour of the taxpayers. However, the question to be considered in these cases, is not in relation to the interpretation of the provision in the taxation statute which deals with the imposition of tax, but on the other hand, the interpretation is that of the relevant clause in a statutory notification intended for an exemption contemplated under the Act from the obligation to pay the tax. When it comes to the exemption from tax, the settled position of law is that, when there is doubt as to the interpretation, the benefit of the same should go to the State. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">12. Indian Banks Association, relied on certain judgements where it was observed that the rule regarding exemptions is that the exemptions should generally be strictly interpreted, but beneficial exemptions having their purpose as encouragement or promotion of certain activities, should be liberally interpreted. However, the question of strict interpretation does not arise in this case, as going by the stipulations contained in the Notification, there is no ambiguity, particularly when it is taken into consideration in the light of the recommendations of the GST Council. The intention is very specific, which is confined to the individual policies only, and not to the group insurance policies. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">13. Of course, there could be a doubt with regard to the definition of 'group' as contained in the Notification, in respect of the groups which are formed solely for the purpose of availing the insurance policy. However, since the IRDAI Regulations does not contemplate for a policy in respect of a group which is formed solely for the purpose of insurance coverage, the policies which are the subject matter in these writ petitions, cannot be construed as policies, that are issued for a group, which are solely constituted for the purpose of insurance coverage. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">14. The exemption provided as per the notification No.<strong><a href="https://taxindiaonline.com/gst/details?id=34320&view=notification&type=notification&type=notification" target="_blank">16/2025-Central Tax (Rate)</a></strong> dated 17.9.2025, is intended to cover the individual policies alone, and not for the group insurance policies issued based on the understanding reached between the Indian Banks Association and the Insurance Company followed by collective bargaining. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">In such circumstances, the Court did not find any merits in these writ petitions and accordingly, they were dismissed. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">In short, the exemption is strictly for individuals. Groups may negotiate better premiums, but they cannot negotiate with GST - remember-GST exemption is strictly individual. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Groups may heal together, but they pay together too. </font></p> <p align="justify"><strong><font face="Verdana, Arial, Helvetica, sans-serif" size="2" style="background-color:#f3dbcf">Arithmetic of Exemption </font></strong></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">5,75,166 serving + 1,51,668 retired = 7,26,834 reasons why collective bargaining is cheaper-but still taxable. </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Fine, they're not a group for exemption. But isn't healthcare a priority, not a revenue stream? </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Hospitals mint money, insurers count money-must the government also profit from the misery of anticipated ill health? </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">If sickness is inevitable, should taxation be inevitable too?" </font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">It would be healthy for the government to consider extending the exemption to these groups who also pay for health insurance. </font></p> <p align="justify"><img src="https://admin.taxindiaonline.com/UploadedFiles/Customs/CaseLaws/2026/JestGST13012026.JPG" style="height:322px; width:216px"/></p> <p align="justify"><font color="#ff0000" face="Verdana, Arial, Helvetica, sans-serif" size="2">Until next week</font></p> <p align="justify"><font face="Verdana, Arial, Helvetica, sans-serif" size="2">Comments/feedback welcome at<a href="mailto:vijaywrite@tiol.in"> vijaywrite@tiol.in</a> or 9848111243 (WhatsApp) </font></p> </body> </html>