Medical insurance premiums for employees and families don't qualify for GST exemption under Notification 12/2017

The AAR-Telangana ruled that medical insurance premiums for employees, pensioners and their families do not qualify for GST exemption under Notification No. 12/2017 as these services lack direct relation to constitutional functions under Article 243W and Schedule XII. Vehicle insurance policies for board-owned vehicles qualify for exemption only if vehicles are directly used for providing constitutional services, not for employee transportation or other non-constitutional purposes.

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Issues:
1. Eligibility of medical insurance premium for exemption under Entry No. 3 of Notification Number 12/2017.
2. Eligibility of vehicle insurance policy for exemption under Entry No. 3 of Notification Number 12/2017.

Analysis:
1. The applicant, a governmental authority, sought clarification on the exemption of medical insurance premium under Entry No. 3 of Notification Number 12/2017. The authority examined the functions entrusted to a municipality under Article 243W of the Constitution of India. The exemption under Notification No. 12/2017 applies to pure services directly related to functions listed in the 12th schedule of the Constitution. Citing legal precedents, the authority determined that the medical insurance services procured by the applicant for employees and their families do not have a direct relation to the functions under Article 243W. Consequently, medical insurance premiums are not eligible for exemption.

2. Regarding the eligibility of vehicle insurance policies for exemption, the authority stated that if the vehicles are directly used to provide services under Schedule XII of the Constitution, they qualify for exemption. However, if the vehicles are used for transportation purposes without a direct relationship to functions under Article 243W, they do not qualify for exemption under Notification No. 12/2017. The ruling clarified that vehicle insurance policies are eligible for exemption only if directly used for services under the specified schedule.

In conclusion, the authority ruled that medical insurance premiums taken by the applicant are not eligible for exemption under Entry No. 3 of Notification Number 12/2017. On the other hand, vehicle insurance policies are eligible for exemption if directly used for services under Schedule XII of the Constitution, but not if used for transportation purposes unrelated to functions under Article 243W. The ruling provides a detailed analysis based on legal provisions and precedents to address the issues raised by the applicant comprehensively.

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