2022 (2) TMI 1043 - AAR - GST

Input tax credit - GST charged by the Medical/ Health Insurance Company in respect of insurance done for employees - requirement prescribed under Section 17(5)(b) stands satisfied or not - HELD THAT - On perusal of section , it is observed that the following two condition is required to avail ITC to medical/health insurance.- (i) outward taxable supply should be same category. (ii) Inward supply should be an element of a taxable composite or mixed supply. It is a fact that the applicant is a manufacturer of textile item and supply is also taxable items. We find that, neither applicant is a supplier related to health insurance service nor this service has an element of supply of textile - In view of the above the applicant cannot claim ITC of GST charged by the Medical/Health insurance company in respect of insurance done for employees, as provided under section 17(5)(b)(i) of the CGST Act, 2017.

Summary

Issues involved:
Claiming input tax credit for GST charged by the Medical/Health Insurance Company in respect of insurance done for employees.

Analysis:

Issue 1: Claiming input tax credit for GST on medical/health insurance:
The applicant sought an advance ruling on whether they could claim input tax credit for GST charged by the Medical/Health Insurance Company for insurance done for employees. The applicant argued that due to the MHA order dated 15.04.2020 mandating medical insurance for employees to prevent the spread of Covid-19, input tax credit should be available as per Section 17(5)(b) of the CGST Act, 2017. The applicant contended that the SOP issued by the MHA was still relevant, making medical/health insurance mandatory, thus satisfying the conditions for availing input tax credit. However, the Authority for Advance Ruling analyzed the provisions of Section 17(5)(b)(i) and concluded that the applicant, being a manufacturer of textile items with taxable supplies, did not meet the conditions required to claim input tax credit for health insurance services. Therefore, the ruling was made that the applicant could not claim input tax credit for GST charged by the Medical/Health Insurance Company in respect of insurance done for employees.

Conclusion:
The Authority for Advance Ruling determined that the applicant was not eligible to claim input tax credit for GST charged by the Medical/Health Insurance Company in relation to insurance for employees, based on the provisions of Section 17(5)(b)(i) of the CGST Act, 2017.