About 2 lakh retired bankers opted for this group policy last year. | Photo credit: Thicha Satapitanon
A Supreme Court decision granting interim relief on the applicability of GST on group insurance policies of retired banks is likely to ease the burden on senior citizens.
While the GST Council has not exempted GST for group health insurance policies, a High Court in Kerala last week issued an interim stay order exempting GST for group policies of retired bankers. The relief granted is not yet permanent and is subject to further court hearings. Experts note that if it is permanently enforced and replicated by courts nationwide, it will come as a big relief to retired bankers who opt for such a group policy.
The petition was filed by the All India Bank Pensioners & Retirees Confederation and other persons in respect of the Indian Banks’ Association (IBA) group health insurance policy, which is jointly administered by IBA and National Insurance Co.
About 2 lakh retired bankers opted for this group policy last year.
“…there will be an interim order, directing the respondents to renew the policy of the petitioners for the current year without insisting on GST. However, it is made clear that this will be subject to further orders to be passed by this Court,” Justice Ziyad Rahman said in an order on October 17, with the next hearing on October 31.
The order directs a group of banks, including Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Indian Bank, Indian Overseas Bank and others, to extend health insurance coverage of pensioners without GST.
business line has learned that after the order, only the public sector bank, Indian Overseas Bank, has issued a circular to its branches to collect pensioner’s premium for 2025-26 without GST.
‘No action’
This was stated by representatives of the All India Bank Pensioners & Retirees Confederation business line that there is no action yet from other banks. They have also written to the IBA seeking advice on compliance with the interim order to provide them relief. “The entire premium is paid by us seniors and not by banks and therefore these should be given the same GST treatment as individual policies,” they said.
Raghavan Ramabadran, Executive Partner, Lakshikumaran & Sridharan Lawyers, said the HC’s direction comes as “an important and welcome relief” to the salaried class, especially senior citizens. “While the legal question surrounding the definition of ‘group’, which includes non-employer-employee groups engaged in common economic activities in addition to insurance, remains open, the Court’s decision is clearly consistent with the broader goal of ensuring affordable insurance coverage,” he said.
Another source from the sector said this business line that while the decision helps uphold the spirit of the Council’s decision to abolish VAT on insurance, the judicial oversight must take into account the guidelines of the GST Council and the IRDAI to balance all aspects. .
Narendra Bharindwal, president of the Insurance Brokers Association of India (IBAI), said that while the GST Council’s decision is clear on group policy, from a social justice perspective, extending the exemption to group health extensions for such senior citizens would be in keeping with the spirit of the Council’s decision.
The director of a general insurance company said a court cannot take issue on a policy issue as the decision lies with the government, but the retired bank employees can request their respective banks to pay the GST component as a gesture of gratitude.
With input from Shishir Sinha and Naga Sridhar
Published on October 26, 2025
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