GST on Health Insurance 2025: Rates, Effects & Tax Relief
When GST was first applied to health insurance premiums, it increased the overall cost for policyholders. However, major changes announced in the 56th GST Council Meeting held in September 2025 aimed to reduce this burden and improve affordability. This article explains how GST impacts health insurance premiums and highlights the latest reforms introduced under GST.
What Is GST on Health Insurance?
GST on health insurance refers to the tax charged on the premium paid for a health insurance policy. Earlier, this tax was levied at 18% on most policies. After the decisions taken in the 56th GST Council meeting, effective from 22 September 2025, GST has been removed on all individual health insurance policies. This exemption covers family floater plans, senior citizen policies, and related reinsurance services. As a result, policyholders are now required to pay only the basic premium amount, without any GST.
However, group health insurance policies—typically offered by employers or corporate entities—continue to be taxed at the existing GST rate of 18%.
Certain government-backed health insurance schemes meant for economically weaker sections were already exempt from GST, and this benefit continues without any change.
GST Rate on Health Insurance with HSN Codes
The applicable GST rates and HSN codes for health insurance services are outlined below:
- Individual Health Insurance (including family floater and senior citizen plans)
- Old GST Rate: 18%
- New GST Rate: Exempt
- HSN Code: 9971
- Covers all individual health policies, including reinsurance services linked to these plans.
- Old GST Rate: 18%
- Reinsurance for Individual Health Insurance
- Old GST Rate: 18%
- New GST Rate: Exempt
- HSN Code: 9971
- Applies to reinsurance services related to individual health policies.
- Old GST Rate: 18%
- Group / Corporate Health Insurance and Reinsurance
- Old GST Rate: 18%
- New GST Rate: 18%
- HSN Code: 9971
- No revision; GST continues to apply.
- Old GST Rate: 18%
- Selected Government Health Insurance Schemes
- Old GST Rate: Exempt
- New GST Rate: Exempt
- HSN Code: 9971 or 9991
- Includes schemes such as the Universal Health Insurance Scheme and the Niramaya Health Insurance Scheme, which remain GST-free.
- Old GST Rate: Exempt
Types of GST on Health Insurance
Different forms of GST apply to health insurance policies, as explained below:
CGST (Central Goods and Services Tax)
CGST is charged on the intrastate sale of a health or medical insurance policy, meaning the transaction takes place within the same state. It is levied along with SGST and collected by the Central Government. The CGST rate applicable to health insurance is 9%.
SGST / UTGST (State Goods and Services Tax / Union Territory Goods and Services Tax)
SGST or UTGST is imposed on the intrastate sale of health or medical insurance policies within a state or union territory. It is charged together with CGST and collected by the respective state or union territory government. The applicable rate of SGST or UTGST on health insurance is 9%.
IGST (Integrated Goods and Services Tax)
IGST applies to the interstate sale of health or medical insurance policies, where the insurer is located in one state or union territory and the policyholder resides in another. This tax is collected by the Central Government and later shared with the consuming state. IGST is generally the combined rate of CGST and SGST/UTGST, and for health insurance, it is charged at 18%.
Impact of GST on Health Insurance
Before GST was introduced, health and medical insurance premiums were taxed under the Service Tax regime at a total rate of 15%. This included 14% basic service tax, 0.5% Swachh Bharat Cess, and 0.5% Krishi Kalyan Cess. With the rollout of GST, these multiple taxes were replaced by a single GST rate of 18% on health insurance premiums.
The insurance sector consistently requested a reduction in the GST rate to around 5%, arguing that the higher tax discouraged wider adoption of health insurance in India. The sharp rise in premiums during the COVID-19 period between 2019 and 2021 further highlighted the need for more affordable health coverage.
A major shift occurred during the 56th GST Council meeting in September 2025, when a significant decision was taken to exempt all individual health insurance policies from GST. This exemption includes family floater plans, senior citizen policies, and related reinsurance services. Effective from 22 September 2025, individual policyholders are no longer required to pay 18% GST, resulting in a substantial reduction in premium costs and improved affordability.
However, group health insurance policies, including corporate insurance plans, continue to be taxed at 18%. Overall, the reforms introduced by the 56th GST Council represent an important move toward increasing health insurance coverage in India by easing the financial load on individual policyholders.
How Is GST Calculated on Health Insurance?
GST is applied to the premium amount of a health insurance policy, whether it is a new policy or a renewal. As clarified in Circular No. 186/2022 dated 27 December 2022, the taxable value for GST calculation is the premium payable after adjusting the no-claim bonus. This means GST is not charged on the no-claim bonus portion.
A no-claim bonus is a discount given to the policyholder for not making any claim during the active period of the insurance policy, and this reduced amount is excluded from GST.
Can Input Tax Credit Be Claimed on Health Insurance Premiums Paid for Employees?
No. Under Section 17(5)(b) of the Central Goods and Services Tax (CGST) Act, input tax credit on GST paid for life insurance and health insurance premiums is generally not allowed. This restriction also applies to group health insurance policies taken for employees.
However, ITC may be claimed if such insurance services are used by a registered person to provide an outward taxable supply of the same type or if they form part of a taxable composite or mixed supply.
FAQs on GST on Health Insurance & Tax Deduction
Is GST on health insurance tax deductible?
Yes. The GST paid on health insurance premiums can be claimed as a deduction under Section 80D of the Income Tax Act, along with the premium amount paid.
Is GST on medical insurance premiums eligible for deduction under Section 80D?
Yes. Both the health insurance premium and the GST paid on it are eligible for deduction under Section 80D, subject to the prescribed limits.
Can businesses claim Input Tax Credit (ITC) on GST paid for health insurance?
No. Input Tax Credit on GST paid for health insurance premiums cannot be claimed in most cases.
However, ITC is allowed only when:
- Health insurance for employees is mandatory under labour laws, or
- The policy covers employee accident insurance as required by law.
Are health insurance premiums for senior citizens subject to a different GST rate?
No. Senior citizen health insurance premiums follow the same GST treatment as other individual policies.
All individual health insurance policies are exempt from GST, regardless of age.
Why was 18% GST earlier charged on health insurance?
Earlier, health insurance attracted 18% GST to align it with other insurance products.
However, from 22 September 2025, all individual health insurance policies are exempt from GST, reducing the cost burden for individuals and families.
What is the current GST rate on health insurance premiums?
- Individual health insurance policies: GST Exempt
- Group or corporate health insurance policies: 18% GST applicable
Is GST applicable on family floater health insurance policies?
No. Family floater health insurance policies taken by individuals are also fully exempt from GST.
Is GST charged on health insurance renewal premiums?
No. Renewal premiums for individual health insurance policies are also exempt from GST.
Does GST exemption apply to mediclaim policies?
Yes. Mediclaim policies taken by individuals are covered under the GST exemption for individual health insurance.
Can I claim Section 80D deduction if my employer pays the health insurance premium?
No. If the premium is paid by the employer and not recovered from you, Section 80D deduction cannot be claimed by the employee.
Is GST applicable on group health insurance provided by employers?
Yes. Group or corporate health insurance policies taken by employers are subject to 18% GST.
Does GST exemption apply to top-up and super top-up health insurance plans?
Yes. If the top-up or super top-up policy is an individual policy, it is also exempt from GST.
Can NRIs claim GST paid on health insurance under Section 80D?
Yes. NRIs can claim Section 80D deduction, including GST paid on health insurance premiums, provided the policy qualifies under Indian tax laws.
Is GST charged on health insurance riders?
Riders attached to individual health insurance policies are also covered under the GST exemption.
