GST Exemption On Health Insurance Applies Only To Individual, Not Group Policies: Kerala High Court

The Kerala High Court has dismissed pleas by retired bank employees seeking GST exemption on group health insurance premiums, holding that a 2025 Central government notification limits the benefit to individual health insurance policies.

A single-judge bench of Justice Ziyad Rahman A.A. said, “It is further clarified in the Explanation in the said notification that the said exemption shall apply to a contract of insurance where the insured is an individual or an individual and family of the said individual. All these aspects clearly indicate that the exemption was provided only to the individual policyholders and not the members of a group insurance policies."

In the case at hand, the petitioners are retired employees of various banks who were covered under a group health insurance policy taken by their respective banks through the Indian Banks' Association for providing medical insurance benefits after retirement.

Pursuant to the introduction of GST, the petitioners were required to pay GST on the insurance premium paid under the group policy. 

The petitioners argued that the GST Council had recommended the exemption of GST on health insurance premiums paid by senior citizens and retired employees, and the benefit of such exemption should be extended to them as well.

The department contended that the exemption was granted; as regards the health insurance policies, the exemption of GST was contemplated only in respect of individual health insurance policies, including family floater policies and policies for senior citizens, and the same was never intended to be extended to the group insurance policies.

Regarding the said contention of the department, the petitioner argued that they had joined together only for the purpose of availing the insurance, and apart from that, there was no commonality of purpose, or they had not engaged in common economic activity. Therefore, the petitioners, even though they availed the policy as a group, would not fall under the 'group' as referred to in the notification, and hence, the exclusions in notifications cannot be made applicable to the petitioners.

Referring to the notification G.S.R.666(E) dated 17.9.2025, the bench observed that Clause 36D of the notification deals with the exemptions relating to the services of the health insurance provided by an insurer to the insured where the insured is not a group. 

The bench pointed out that 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 (Insurance Regulatory and Development Authority of India) Regulations, and therefore, the fact that the definition of "group" included in notification contains a clause that “other than availing insurance”, would not make a difference.

"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", clarified the bench.

The High Court held that the exemption provided as per a September 2025 notification covers the individual policies alone and not the group insurance policies.

In view of the above, the bench dismissed the petition.

Case Title: E.P. Gopakumar v. Union of India 

Citation: 2026 LLBiz HC (Ker) 4

Case Number: WP(C) NO. 38316 OF 2025

For Petitioners: Advocates V.K. Prasad and Josna C.F.

For Respondents: Advocates Praveen K.S., P.R. Sreejith, V. Girishkumar, P. Fazil, Jithin Paul Varghese, Saju Thaliath, C. Prabitha, Fadil Fazil, Aswathy Jayachandran and Akshaya Thomas.