A High Court decision granting interim relief on the applicability of GST for group insurance policies of bank retirees is likely to ease the burden on senior citizens.
While the GST Council has not exempted GST on group health insurance policies, a Kerala High Court has passed an interim stay order last week to exempt GST on group policies of retired bankers. The relief granted is not yet permanent and is subject to further Court hearings. Experts note that if upheld permanently and replicated by courts nationwide, it will be a big relief to retired bankers who opt for such group policies.
The writ petition was filed by the All India Bank Pensioners & Retirees Confederation and other individuals in relation to the Indian Banks’ Association (IBA) group health insurance policy jointly managed by IBA and National Insurance Co.
Around 2 lakh retired bankers opted for this group policy as of last year.
“…there shall be an interim order, directing the respondents to renew the policies of the petitioners for the current year without insisting on GST. However, it is clarified that this shall be subject to further orders to be passed by this Court,” Justice Ziyad Rahman said in an order on October 17, with the next hearing set on October 31.
The order directs a group of banks, including Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Indian Bank, Indian Overseas Bank, and others, to renew the retirees’ health insurance without GST.
businessline has learnt that after the order, only the public sector bank, Indian Overseas Bank, has issued a circular to its branches to collect Retirees’ premium for 2025-26 without GST.
‘No action’
Representatives of the All India Bank Pensioners & Retirees Confederation told businessline that there is no action from other banks yet. They have also written to the IBA to issue an advisory on the compliance of the interim order to provide them relief. “The entire premium is paid by us senior citizens and not by banks and hence these should be given the same GST treatment as individual policies,” they said.
An tax expert, said that the direction by the HC marks “a significant and welcome relief” for the salaried class, especially senior citizens. “While the legal question surrounding the definition of ‘group’, which includes non-employer-employee groups engaged in common economic activities beyond insurance, remains open, the Court’s decision clearly aligns with the broader goal of ensuring affordable insurance coverage,” he said.
Another industry source told businessline that while the decision helps uphold the spirit of the Council’s decision to remove GST on insurance, judicial scrutiny should take it account guidance from the GST Council and IRDAI to balance all the aspects. .
President, Insurance Brokers Association of India (IBAI), said that though the GST Council’s decision is clear on group policies, from a social equity point of view, extending the waiver to group health renewals for such senior citizens would align with the spirit of the Council’s decision.
The MD of a general insurance company said that a court cannot take a call on a policy matter as the decision rests with the Government, but the retired bank employees can request their respective banks to foot the GST component as a gesture of gratitude.
