GST on health insurance: current rate, exemption rules, and what policyholders need to know

Health insurance plays a key role in protecting individuals from rising medical costs, yet many policyholders do not fully understand the taxes applied to it. In India, the Goods and Services Tax (GST) is charged on health insurance premiums, which increases the overall cost of coverage. This often leads to confusion about pricing and a lack of clarity on whether any exemptions are available. A clear understanding of the current GST rate, applicable exemption rules, and their impact on policyholders is essential. It enables individuals to make informed decisions and manage their insurance expenses more effectively.

What is GST on health insurance?

Goods and Services Tax (GST) is an indirect tax charged on most goods and services in India. It came into effect on 1 July 2017, replacing earlier taxes like service tax, excise duty, and VAT to create a single, unified system. Health insurance falls under financial services and was earlier taxed at 18%.

This meant that when you paid your health insurance premium, GST was added to the base amount. For example, a premium of ₹20,000 would include ₹3,600 as GST, taking the total cost to ₹23,600. However, from 22 September 2025, GST has been removed for all individual health insurance policies.

Current GST Rate on Health Insurance

The table below gives a clear snapshot of how GST applies to different types of health insurance policies before and after the recent change.

Most individual-focused health policies are now tax-free, while group-based insurance plans continue to attract GST.

The 2025 GST exemption: what changed and why it matters

At its 56th meeting on 3 September 2025, the GST Council, chaired by Nirmala Sitharaman, approved the exemption of all individual health and life insurance policies from GST, effective 22 September 2025.

The move removed the earlier 18% tax burden, improving affordability especially for middle-income households and senior citizens and supporting the Insurance Regulatory and Development Authority of India’s goal of “Insurance for All” by 2047.

Following this change, retail health insurance premiums grew 19% year-on-year to ₹48,952 crore by February 2026, indicating increased uptake driven by better affordability.

What the exemption covers

• All individual health insurance policies, including single-person and family floater plans

• Senior citizen health insurance policies

• Individual health policies with embedded additional covers (such as personal accident or travel cover) sold as a single product at a single price

• Renewal premiums on existing individual policies, where payment is made on or after 22 September 2025

• Reinsurance of individual health insurance policies

• Lapsed policies that are revived or reinstated on or after 22 September 2025
  

What the exemption does not cover

• Group health insurance policies, whether employer-sponsored or otherwise

• Group credit life insurance

• Group term insurance policies

• Motor insurance, home insurance, standalone travel insurance, and other general insurance categories

How the GST exemption works in practice: payment date is what matters

GST applicability is determined by the date of premium payment — not the policy due date or invoice date.

Scenario 1 — Due date before 22 September 2025, payment made on or after that date

No GST applies. The payment date governs, and it falls on or after the exemption effective date.

Scenario 2 — Instalment premium paid before 22 September 2025

18% GST applies to that installment. Each instalment is assessed individually based on its own payment date. Instalments paid on or after 22 September 2025 are exempt.

Scenario 3 — Advance premium received before 22 September 2025 for a policy period falling after that date

Under Section 14 of the CGST Act 2017, the applicable rate is determined by which two of the following three events occur first: (a) supply of service, (b) issue of invoice, and (c) receipt of payment. Where two out of three events fall before 22 September 2025, the old 18% rate applies. Where two out of three fall on or after that date, the exemption applies.

Practical note: If your policy is due for renewal and you have not yet paid, your renewal premium will attract 0% GST. There is no provision to claim a refund for GST paid on premiums settled before the exemption date.

Group health insurance: GST remains at 18%

The exemption is explicitly limited to individual policies. Group health insurance — whether employer-funded, partially funded, or group credit life — continues to attract GST at 18%.

For employers: Input Tax Credit rules

Under Section 17(5)(b) of the CGST Act, input tax credit (ITC) on GST paid for employee health insurance is blocked in most cases. ITC can only be claimed where the insurance is mandated by law — for example, under the Employees' State Insurance Act or any other applicable labour legislation — or where it forms part of a legally required employee benefit. Voluntary group health policies offered as a discretionary employee benefit do not qualify for ITC.

For employees: Section 80D treatment

Group health insurance premiums paid by an employer do not qualify for deduction under Section 80D of the Income Tax Act 1961. The deduction is available only for premiums paid directly by the individual taxpayer.

HSN code for health insurance

The Harmonised System of Nomenclature (HSN) code applicable to health and life insurance services in India is 997133. This code identifies the service category for GST classification purposes and is relevant for businesses filing GST returns that include insurance-related transactions.

Section 80D: income tax benefits on health insurance premiums

The GST exemption does not affect your eligibility for deductions under Section 80D of the Income Tax Act 1961. These are two separate frameworks — GST is an indirect tax on the transaction; Section 80D is an income tax deduction on the premium paid.

Important: Section 80D deductions are available only if you file under the old income tax regime. Under the new (default) regime introduced under Section 115BAC, Section 80D deductions are not available. This is a critical consideration for tax planning that applies regardless of the GST position.

Multi-year policy deduction

If you purchase a multi-year health insurance policy (2 or 3 years) and pay the full premium upfront, the Section 80D deduction is allowed on a proportionate basis — divided equally across the years of coverage — subject to the annual limits.

Example: A ₹60,000 premium paid for a 3-year policy permits a deduction of ₹20,000 per year, subject to the applicable annual ceiling.

Since individual health insurance premiums now attract 0% GST, the premium amount you claim under Section 80D is simply the base premium. There is no GST component to include or exclude in the calculation.

How GST is calculated on health insurance: worked examples

The table below compares the cost of an individual health insurance policy with a ₹30,000 base annual premium before and after the September 2025 exemption.

Group policy example: A group health insurance policy with a base premium of ₹18,000 per employee continues to attract 18% GST (₹3,240), making the total per employee ₹21,240.

Note: All figures are illustrative. Actual premiums depend on age, sum insured, plan type, and insurer-specific underwriting criteria.

What the GST exemption means for insurer pricing

When a service becomes GST-exempt, the insurer loses the ability to claim Input Tax Credit on inputs used to provide that service — items such as technology, professional services, and administrative expenses. This is referred to as an ITC reversal.

Some insurers may partially offset this by adjusting base premiums upward. The Ministry of Finance has indicated that anti-profiteering provisions under GST law will apply to monitor whether the benefit is passed on to policyholders. Industry data through February 2026 confirms that most insurers did not increase base premiums following the exemption.

When comparing plans post-exemption, compare base premiums directly across insurers. The transparency of pricing has improved now that the GST component is no longer a variable in total outgo.

NRI policyholders: export of services or exempt?

For an individual health insurance policy issued to a non-resident Indian (NRI) customer on or after 22 September 2025, the treatment depends on whether the policy satisfies the conditions for export of services under GST law. If it qualifies as an export, the supply remains zero-rated (zero-rated with ITC entitlement, rather than simply exempt). If it does not meet those conditions, the policy is treated as an exempt service. NRI policyholders should confirm the applicable classification with their insurer.

A brief history of GST on health insurance

Frequently asked questions

Is there any GST on health insurance premiums now?

No GST applies to individual health insurance policies — including individual plans, family floater plans, and senior citizen plans — for premiums paid on or after 22 September 2025. Group health insurance continues to attract GST at 18%.

My policy was due in August 2025 but I paid in October 2025. Does the exemption apply?

Yes. The applicable GST rate is determined by the date of actual payment. Since payment was made on or after 22 September 2025, no GST applies.

I paid my annual premium in advance before September 2025. Can I get a refund of the GST paid?

No. There is no provision for a refund of GST paid on premiums settled before the exemption date. The exemption applies only to payments made on or after 22 September 2025.

My employer provides group health insurance. Does the GST exemption apply?

No. Group insurance policies, including employer-sponsored group health covers, continue to attract GST at 18%. Only individual policies are exempt.

Does the GST exemption affect my Section 80D deduction?

The two frameworks are independent. Section 80D deductions remain available under the old income tax regime. Since there is no longer any GST on individual premiums, you simply claim the base premium as the deductible amount.

My health insurance policy includes personal accident and travel cover in a single product. Is the entire premium GST-exempt?

Yes. Where a single product sold at a single price bundles individual health cover with additional features such as travel or personal accident cover, the entire product falls under the GST exemption. Source: Department of Financial Services FAQ, February 2026.

My previous health insurance policy lapsed. If I revive it after 22 September 2025, will I pay GST?

No. Premiums paid for a reinstated or revived policy on or after 22 September 2025 are exempt from GST. Source: Department of Financial Services FAQ, February 2026.

Can a business claim Input Tax Credit on health insurance premiums paid for employees?

Generally, no. Section 17(5)(b) of the CGST Act blocks ITC on health insurance for employees in most cases. An exception exists where the insurance is mandated by law or forms part of a legally required employee benefit.

Does the GST exemption apply to top-up and super top-up health plans?

Individual top-up and super top-up health plans fall within the ambit of individual health insurance. Premium payments made on or after 22 September 2025 for such plans should attract 0% GST. Confirm the specific treatment with your insurer.

What is the HSN code for health insurance?

The HSN code applicable to health and life insurance services in India is 997133.