No GST Exemption for Group Health Insurance: Relief Only for Individual Policies, Says HC

The Kerala High Court dismissed writ petitions by retired bank employees, ruling GST exemption applies only to individual health insurance policies. Group policies, even for retirees, remain taxable, as IRDAI rules prevent forming groups solely to claim insurance benefits.

E.P. Gopakumar and Others have filed the present writ petitions [WP(C) Nos. 38316/2025, 36636/2025, 37812/2025, 38178/2025, 38436/2025, 38552/2025, 38670/2025, 38757/2025] in the Kerala High Court against the Union of India and Others.

All these cases have been filed by retired bank employees who are members of group health insurance policies issued by the National Insurance Company. All these petitioners cited the Government of India’s notification No. 16/2025-Central Tax (Rate); G.S.R. 666(E) dated September 17, 2025, and argued that they all should be liable to pay GST on their insurance premiums, as the said notification permits GST exemption on certain health insurance policies. However, still insurance companies and banks ask them to pay GST on the same, which is a key issue to be challenged through a writ petition.

The petitioners claimed that the GST exemption should apply to their policies because they had joined together only to avail insurance and thus should not be categorised under the definition of a “group” in the notification. They further argued that the relief of GST exemption for individual policies should be extended to them, as they are not a member of a group for any monetary purpose.

Also stated that as per the recommendations of the 56th GST Council meeting, every individual health insurance policy (including family floater policies and policies for senior citizens) and reinsurance is entitled to GST exemption. This had been proposed to make insurance policies available for common individuals at affordable rates and to increase its coverage in the entire country.

The government and the insurance company claimed that the GST exemption was only allowed for individual health insurance policies, not for group insurance policies. They flagged that group policies, like the ones in these cases, were negotiated by the Indian Banks’ Association for retired employees and offered benefits such as lower premiums, coverage for pre-existing conditions, and easier administration. These group policies are controlled by IRDAI regulations, which require a relationship between the members and the policyholder and prohibit forming groups solely to get insurance.

When the court examined the arguments of both sides and the provisions of the cited government notification and IRDAI regulations, it observed that the definition for GST exemption applies only to individual policies and policies for an individual’s family. Further observed that the insurance policies highlighted in the present writ petitions were issued as group policies, with collective bargaining and benefits not available in individual policies. Therefore, they all fall outside the ambit of GST exemption as mentioned in the reference notification.

Hence, the court held the argument of the petitioner about the definition of “group” in the notification as invalid. The court ruled that since the IRDAI regulations do not allow groups formed only for insurance, the policies cannot be treated as exempt under GST. After the deep examination, the high court concluded that in the present case, the exemption clearly applies only to individual policies. In conclusion, the Kerala High Court dismissed all the writ petitions, ruling that all the petitioners are liable to pay GST on these group health insurance policies, as the exemption for individual policies does not extend to them.