Example

M/S ABC is providing Mediclaim facility to all its employees of Rs. 100000/- and not recovering any amount from employees. 
1) Whether ABC is eligible for ITC of GST paid on Mediclaim facility.
2) Whether this facility is supply from ABC to its employees and subject to GST. 

Answer 

1. Section 17(5) of CGST Act restricts credit on the following supply of goods or services or both:'
    (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;
   
    (ii) membership of a club, health and fitness centre;

    (iii) rent-a-cab, life insurance and health insurance except where '' 
        (A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or
       
        (B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply; and

  (iv) travel benefits extended to employees on vacation such as leave or home travel concession

Therefore M/S ABC is not eligible for credit of GST paid on Mediclaim facilty.

2. This facility is considered as CTC and treated as a part of salary therefore not a supply.