Page 24 - GSTL_6th August 2020_Vol 39_Part 1

J6 GST LAW TIMES [ Vol. 39

ITC ON MEDICAL INSURANCE — AN
AREA OF DARKNESS
By
Debasish Bandyopadhyay, B.Com., LL.B., PGDFM

The Government had to take several measures in
order to kick-start the economic activity which almost
came to a grinding halt due to the impact of nationwide
lockdown. In one such measures, the Ministry of Home
Affairs (MHA) vide Order No. 40-3/2020-DM-I(A), dated
15-4-2020 has issued certain guidelines under Disaster
Management Act, 2005 for resuming business operation elaborating on the activi-
ties to be permitted as well as the activities that shall remain forbidden in specific
areas, i.e., outside the containment zones across the country. In the aforesaid sce-
nario, businesses across the country are obliged to spend considerable amount of
money towards procurement of certain goods and/or services as prescribed un-
der the guidelines to comply with the aforesaid requirements. In terms of the
said guidelines, factories, establishments and offices are required to mandatorily
follow various terms and conditions during the lockdown period as prescribed in
Annexure-II of the said order, failing which, penal provisions may be invoked
under Disaster Management Act.
It is pertinent to note that inter alia, mandatory medical insurance for the
workers is one of the major conditions to be complied with by the businesses
across the country towards restarting the limited operational activity in the busi-
ness premises. Since, the aforesaid compliance requirements led to occurrence of
substantial spending in such a difficult economic environment, it is pertinent to
understand that the businesses should undertake appropriate strategy to opti-
mize the claim of ITC in order to minimize the adverse economic impact of ongo-
ing crisis on their respective businesses. Therefore, it is important to examine the
eligibility of ITC claim on medical insurance for the workers as mandated by the
MHA vide order dated 15-4-2020.
The term ‘medical insurance’ has not been defined under the MHA order
or the guidelines issued thereunder. Generally, the medical insurance means,
insurance coverage limited to hospitalization expenses and treatment towards
the pre-specified ailments and/or accidents. Medical insurance doesn’t offer
comprehensive insurance coverage. However, it is pertinent to underline that
Section 17(5) of CGST Act, 2017 talks about ‘life insurance and health insurance’,
there is no reference of the term ‘medical insurance’ therein. Now, the question
that may arise, is there any difference between medical insurance and health in-
surance and can it be used interchangeably. The major differences between
health insurance and medical insurance is given below;
 Medical insurance covers only hospitalization, pre-specified ail-
ments and accidents that too for a pre-specified amount while
health insurance will provide with comprehensive coverage against
hospitalization expenses.

GST LAW TIMES  6th August 2020  24