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Subject: Formal Representation for the Extension of 0% GST to Self-Funded Group Health Insurance Schemes for Senior Citizens. (Reference - Notification No. 16/2025-Central Tax: Exemption of GST on Health Insurance).

Respected Sir/Madam,

Subject: Representation for the removal of "Unintended Tax Disparity" for Senior Citizens and Retirees under Notification No. 16/2025-Central Tax (Rate).

The Preamble

On behalf of the senior citizen community and various retiree associations across India, we welcome the landmark decision of the 56th GST Council to exempt individual health insurance premiums (0% GST). However, we wish to bring to your urgent attention a critical "Tax Trap" created by the exclusionary clause in Notification No. 16/2025, which denies this benefit to policies classified as "Group," even when they are 100% self-funded by senior citizens.

The Core Anomaly: "Form over Substance"

The current notification limits the 0% GST benefit to policies "where the insured is not a group." This creates a discriminatory environment based solely on administrative nomenclature:

The Individual Path: A senior citizen buying a standalone policy pays 0% GST.
The Collective Path: A retired senior citizen buying the same protection through a group channel (formed by a PSU like Bank/Insurance/Government Companies) is burdened with 18% GST.

This distinction penalizes "Togetherness." For a pensioner on a fixed income, an 18% tax is not a mere line item; it is a prohibitive barrier to healthcare.

 

 

 

The "Family Floater" Contradiction

Strictly speaking, a Family Floater policy—which the Council has rightfully exempted—is a "Group Cover" of a nuclear family. In a floater, multiple lives are covered under a single premium, benefiting from the "Group Advantage" of shared limits.

The Disparity: If the law accepts a "Group of 4" (Family) as exempt, there is no logical or moral basis to tax a "Group of 400" (Retirees) when both groups consist of end-consumers paying from their own pockets without claiming Input Tax Credit (ITC).

Rebuttal to the "B2B" Classification

The Council’s stance that Group Insurance is a "Business-to-Business" transaction is factually inapplicable to Retiree and Employee-pay-all schemes:

Non-Commercial Conduits: Retiree associations are non-profit entities. They do not utilize the insurance for commercial gain, nor do they claim ITC.
The End-Consumer: The individual retiree is the ultimate "end-user." The association acts merely as an administrative postman.
Self-Funding: Unlike corporate-sponsored perks, these premiums are borne entirely by retirees from their life savings or pensions.

Constitutional & Judicial Conflict

The current disparity is under intense scrutiny (notably in Vinod Mukundan vs. Union of India). While the courts look at technical compliance, the Right to Equality (Article 14) is compromised when two citizens of the same age and financial status are taxed differently based on the "buying channel" they choose. 

A tax policy should not penalize a citizen for choosing a more efficient, collective way to secure their health.

THE FORMAL PRAYER

In light of the vision for "Insurance for All by 2047," we humbly pray that the GST Council: 

Broaden the Exemption Scope: Amend Notification No. 16/2025 to include all health insurance schemes where the premium burden is explicitly borne by individual members/retirees, regardless of the policy's classification as “Group."

Adopt a Beneficiary-Centric Model: Deem all health insurance for Senior Citizens (aged 60+) as GST-Exempt (0%) based on the age of the beneficiary, removing the "Group" vs "Individual" administrative hurdle.

Issue Pan-India Clarification: To prevent fragmented relief led by localized litigation, issue a uniform clarification ensuring all retirees—whether in PSU, government, or private associations—are treated at par.

Conclusion:

Senior citizens have spent their productive years building this nation. In their twilight years, they should not be taxed for the basic security required for survival. We trust the Ministry will rectify this "Tax on Togetherness" in the upcoming Council meeting.

Yours faithfully,

Udayachandran C P.

2A Skyline Opal Arch, Judges Avenue, Kaloor, Ernakulam, Keralam - 682017 .(9003159225/cp.uday@gmail.com)