The Kerala Authority for Advance Ruling has held that health insurance services provided under MEDISEP Phase-II (Medical Insurance Scheme for State Employees and Pensioners) by The Oriental Insurance Co. Ltd. to the Government of Kerala are exempt from GST under Serial No. 40 of Notification No. 12/2017-CT (Rate), subject to the condition that the entire premium is paid by the Government of Kerala. The ruling by Members Jomy Jacob and Mansur M.I. in KER/17/2026 (decided 17.08.2026) holds that the notification does not require the Government itself to be the insured person or to receive the insurance benefits — the employees and pensioners are beneficiaries, while the Government is the recipient of the service under Section 2(93) being the person liable to pay the consideration.
The ruling is confined to Clause A beneficiaries (serving State Government employees, pensioners, and family members). The AAR noted that the Insurance Contract/MoU itself recorded the parties’ understanding that the premium was intended to be exempt, with the Government undertaking to bear the entire premium. The ruling relied on CBIC Circular No. 16/16/2017-GST which had specifically clarified that exemption under Entry 40 is available where the entire premium is paid by the Government, regardless of who the insured persons are. The separate Clause B beneficiaries (PSU/Board employees) attract GST at Rs. 8,237 plus applicable GST under a distinct premium arrangement.
- 2026-juristway.com-2600-AAR(Kerala)-GST | AAR Kerala | KER/17/2026 | 17.08.2026