Bank Unions Urge Finance Minister to Exempt Retirees’ Medical Insurance Premiums from GST

The United Forum of Bank Unions (UFBU), representing nine major banking unions, has appealed to Finance Minister and GST Council Chairperson Nirmala Sitharaman to exempt senior citizens and retired bank employees from paying Goods and Services Tax (GST) on their group medical insurance premiums.

In its representation on September 5, 2025, UFBU noted that since 2015, banks have implemented a Group Medical Insurance Scheme for both serving and retired employees. For active employees, banks bear the full cost of the premium, including GST. However, in the case of retirees, the entire premium amount – along with the 18% GST – is directly paid by the senior citizens themselves.

The unions welcomed the GST Council’s recent decision to exempt GST on individual health and life insurance premiums, calling it a “most welcome measure of relief” for the general public. But they cautioned that the exemption might not automatically extend to retirees in banks, since their coverage falls under a Group Insurance Policy.

“The premium on the minimum basic medical cover for retired bank employees is already a sizeable financial burden. The additional 18% GST makes it even harder for elderly pensioners to afford health protection,” the letter stated.

The UFBU argued that, although the policy is structured as a group scheme, retirees are in fact paying the premiums individually – in some cases, such as with the State Bank of India, directly to the insurance company. On this basis, the unions urged the Finance Minister to issue a clarification ensuring that GST exemption applies to retired employees’ contributions as well.

The appeal has been signed by all major banking unions under the UFBU umbrella, including AIBEA, AIBOC, NCBE, AIBOA, BEFI, INBEF, INBOC, NOBW, and NOBO.

If accepted, the move would significantly reduce the financial burden on thousands of retired bankers and senior citizens who continue to depend on group health insurance schemes for medical coverage.