HCL Tech asks Centre to consider health insurance as authorised services eligible for SEZ benefits

HCL Technologies Ltd has appealed to the Centre against the decision of the Approval Committee of the NOIDA SEZ (NSEZ) rejecting its request for considering group health and medical insurance services for employees in a unit as authorised operations eligible for tax benefits.

“The matter will be considered by the Board of Approval for SEZs in its meeting on February 14,” said an official. The unit is based in HCL’s IT/ITES SEZ in Noida. The BoA — chaired by the Commerce Secretary — is the top decision making body for SEZs.

The representatives of the unit in Noida, in their request considered by the Approval Committee, had pointed out that by insuring the health and medical needs of employees, the company ensured productivity in their operations.

The unit requested that the group health and medical insurance received by it should be covered within the default authorised services issued by the government under the title ‘general insurance business services’ for the purpose of the SEZ Act and be entitled to SEZ law benefits.

The Approval Committee, however, observed that exemption available to the SEZ units is only on input services related to authorised operations of the unit. “The group insurance of employees is related to individuals and not related to authorised operations of the SEZ unit. The committee also observed that income earned by an unit account of export is exempted from payment of income tax, whereas individual employees are given the benefit of income tax exemptions,” the agenda note said.

In its decision conveyed to the unit in January, the Approval Committee clarified that the group health and medical insurance of its employees is not related to the authorised operations of the SEZ unit and hence is not covered under default authorised services, namely ‘general insurance business services’.

It also decided to refer the matter to the Department of Commerce informing it of the unit’s request and the Approval Committee’s decision.

The unit then filed an instant appeal stating that being an SEZ unit it was eligible for the zero-rated benefit under Sector 16(1) of the IGST Act on the health insurance services received under the health insurance policies.

Putting forward a long list of arguments supporting its case, the unit also reasoned that general insurance business service is covered under the default list of services approved by the Department of Commerce and health insurance services was a subset of general insurance business service.

“The appellant has requested the BoA to set aside the impugned order passed by NSEZ and to declare that the health insurance services received by the appellant from various health insurance service providers covering its employees towards the authorised operations of the appellant.

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