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GST Council Unblocks Tax Credit on Employee Insurance

The GST Council has expanded input tax credit to several business expenses, including health and life insurance taken for employees.

ITC will also be available on outdoor catering for business events, telecom towers and pipelines outside factories, free samples distributed by companies, and stock written off after expiry where the law requires destruction.

The changes bring relief to pharmaceutical and FMCG companies, which routinely distribute free medicine samples and must destroy expired stock under the law.

The Council referred the question of ITC on motor vehicles and their leasing or renting to a committee of officers for further consideration.

Refunds under the inverted duty structure will now also cover tax paid on input services, not just goods, for credit availed on or after November 1, 2026.

The Law Committee had earlier recommended five amendments to unblock ITC on these items, treating them as genuine business expenses. The Council also set up a committee of officers to examine protection for genuine buyers who hold proper invoices but whose suppliers default.

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