GST On Health Insurance Removed? Know the Facts!

The 56th Goods and Services Tax (GST) Council meeting announced a significant relief for people purchasing individual life and health insurance policies. The GST Council has exempted all individual life and health insurance policies from GST, nullifying the previously applicable rate of 18% GST on health insurance premiums. The meeting was convened on September 3, 2025, under the chairpersonship of the Union Finance Minister, Smt. Nirmala Sitharaman.

Which Type of Health Insurance Policies are Now GST Exempted?

The GST Council has exempted GST on the following types of health insurance policies: 

• Individual health insurance policies, 
• Family floater health insurance policies,
• Health insurance policies for senior citizens, and 
• Reinsurance policies

The prevailing and new rates of GST on health insurance services have been mentioned below as per the GST meeting press release:

Here’s the 56th GST Meeting Press Release.

Objective Behind GST Exemption on Health Insurance Policies

The GST exemption on health insurance in India highlights the GST Council's strategic effort to fulfil the following objectives: 

• Broaden the insured segment in India 
• Promote healthcare accessibility for all, and 
• Reduce the financial burden on citizens seeking health insurance. 

Policyholders and the insurance industry expect this development to be well-received, which aims to create a more inclusive health insurance market.

How will GST Exemption Benefit the Policyholders?

This significant decision to exempt health insurance from GST is anticipated to make health insurance more accessible and affordable for individuals nationwide. 

Here is how this tax reform is going to benefit the policyholders:

• The removal of GST is likely to result in lower premium costs, thereby encouraging a larger population to opt for health insurance coverage. 
• This move is expected to boost the penetration of health insurance in India substantially and will increase the share of the insured segment in India. 
• Moreover, the GST reform will contribute to improved public health outcomes and financial security for individuals against medical exigencies.

Overall, the decision to exempt GST on health insurance is going to increase the proclivity of general public towards health coverage by reducing their tax burden and boosting their savings.

No GST on Health Insurance Premium in India: A Move to Cover the “Missing Middle”

So far, a large portion of the Indian population from the middle-income group has remained deprived of concrete health coverage.

In this regard, Dr Vinod K Paul, Professor of Neonatology at AIIMS New Delhi, had once revealed that nearly 40 crore people don't have any financial cover for health. While the economically weaker sections (EWS) have access to government health coverage schemes such as Ayushman Bharat, these ‘missing-middle’ group is neither so poor to be dependent on such schemes nor rich enough to afford private health coverage, which was hitherto subject to an 18% health insurance GST rate. 

The recent decision to remove GST on insurance premiums will now incentivise the ordinary people to buy health insurance policies, which will cover this ‘missing middle’. Gradually, the introduction of a 0% GST rate on health insurance in 2025 is expected to help achieve the goal of nationwide health coverage.

How will GST Exemption Reduce Financial Burden on Health Insurance Policyholders?

The direct impact of the GST exemption is a reduction in the total cost of health insurance premiums. Previously, an 18% GST rate was applied to the health insurance premiums, increasing the overall expense for policyholders. With this GST reform, individuals will pay only the annual premium with no additional tax. 

So, Are Insurance Premiums GST Exempt?

Yes, the premiums paid for new and renewal health insurance policies will now be exempted from GST. This implies that GST will not apply to health insurance premiums, whether for new or renewed policies or reinsurance policies.

Let‘s understand this with the help of a case study:

Consider a health insurance policy with a yearly premium of ₹10,000.

From the above chart, we understand that:

• Before the GST exemption, an 18% GST would have been applied, adding ₹1,800 (18% of ₹10,000) to the premium, bringing the total cost to ₹11,800. 
• Now, with the exemption applicable, the policyholder only pays the yearly premium of ₹10,000, saving ₹1,800. 

*The numbers are for illustrative purposes only. The actual amount may vary.

This GST reform makes health insurance more attainable, especially for those with limited disposable income. It also allows individual policyholders to allocate their funds to other essential needs.

Crucial Guideline: The above information is meant for guidance purposes only. We do not claim the cost-benefit of health coverage due to the tax reform announced by the government. Kindly refer to the IRDAI guidelines for detailed information. 

So now,

Save More in Taxes with an Affordable Health Insurance Plan!

With the exemption of GST on medical insurance premiums, you can save more on taxes while buying or renewing your health insurance policy. Now that you are saving GST on health insurance premiums, you may also utilise it to add optional benefits to your policy, such as Unlimited Care, Be-Fit Plus, Wellness Benefits, and more.

Disclaimer: Verifying the policy details and coverage with the official policy documents is essential. Additionally, please consult a professional medical expert to verify the details of your health concerns.