Save tax up to ₹75,000~ u/s 80D
Did you know all insurance plans are subject to the Goods and Services Tax (GST)? GST-inclusive premiums are eligible for deductions, which provide economic ease. The GST on medical insurance is 18%.Read this comprehensive guide to learn more about the GST on insurance premiums.
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Under Section 80d of the Income Tax Act 1961, policyholders can claim tax deductions on medical insurance premiums. This means taxpayers can claim deductions on GST for health insurance.
GST is a single indirect tax applied at the point of consumption of various goods, such as household items, food, textiles, and electronic products, as well as services like transportation, real estate, and insurance. The Goods and Services Tax (GST) was introduced in 2017 to remove the cascading effects of multiple taxes. GST is applied on various goods and services under five slabs: 0%, 5%, 12%, 18%, and 28%.
There are four types of GST:
GST applies to health insurance because it is classified as a service industry, and GST is a tax on services. The Insurance HSN code and GST rate are 997133 and 18% respectively.
Several insurance schemes are free from GST. Government-run health insurance schemes designed for the economically weaker sections of society attract zero GST.
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Health Insurance for listed pre-existing diseases
Health insurance for elderly with no pre-policy checkup.
All insurance schemes, including the best health insurance, fall under the Goods and Services Tax (GST). Healthcare services have a lower or zero taxation, but as per the government, insurance is a financial service rather than a healthcare service. GST on health insurance means the insured has to pay 18% GST on medical insurance premium amount.
After the implementation of GST on medical insurance premiums, insurance costs for buyers have risen as the premium amount increases. From the earlier 15% service tax (14% Basic Service Tax and 0.5% each of Swachh Bharat Cess and Krishi Kalyan Cess), they will now have to pay an additional amount based on the current rate.
However, those who purchased policies earlier and for a longer period would not be impacted by GST. Yet, when they renew their plans, their premium will be based on present tax rates.
The premium you pay towards your health plan offers comprehensive coverage for various medical expenses, including hospitalisation. Such plans also cover the costs incurred during the policy period for pre- and post-hospitalisation, daycare treatments, diagnostic tests, OPD, and maternity care. However, with transparency and uniformity, policyholders can comprehend tax attributes efficiently.
According to Section 80d of the Income Tax Act, 1961, deductions can be claimed on medical insurance premiums up to Rs 1 lakh. The deduction amount depends on your age and the health insurance premium paid. Taxpayers can also claim GST on insurance claims for premiums paid on behalf of their family members. Senior citizens can claim a deduction of up to Rs 50,000, while individuals below 60 can claim a deduction of up to Rs 25,000.
he deductions of GST for health insurance under Section 80D of the Income Tax Act may vary depending on the policy details. Below is the table that helps you to understand it better:
| Persons Covered | Exemption Limit | Total |
|---|---|---|
| Self and family | Rs 25,000 | Rs 25,000 |
| Self and family + parents | Rs 25,000 + Rs 25,000 | Rs 50,000 |
| Self and family + senior citizen parents | Rs 25,000 + Rs 50,000 | Rs 75,000 |
| Self (senior citizen) and family + senior citizen parents | Rs 50,000 + Rs 50,000 | Rs 1,00,000 |
GST on mediclaim policy considerably impacts different elements of insurance in India. Here are the types of GST in health insurance:
The GST on health insurance products applies to the entire premium amount. Let’s say you opted for a health insurance policy with a coverage amount of Rs 5 Lakh, and the premium cost is Rs 11,000 per year.
| Scenario | Tax rate | Tax amount on 11,000 | Total premium payable |
|---|---|---|---|
| Before GST | 15% | ₹1,650 | ₹12,650 |
| After GST | 18% | ₹1,980 | ₹12,980 |
Explanation:
Here's how you can calculate GST:
Identify the GST Rate: The GST rate of insurance premiums in India is 18%. This means that your total premium amount is made up of GST.
Determine the Premium Amount: The premium in health insurance is the cost the policyholder must pay the insurer for the policy coverage. The GST is calculated on the base amount.
Calculate GST Amount: Here is how you can calculate the GST amount on your health insurance premium:
GST Amount = (Premium Amount * GST Rate) / 100
For instance, if your health insurance premium is ₹20,000, the GST amount would be:
GST Amount = (20,000 * 18) / 100 = ₹3600
Calculate the Total Premium: The total premium payable by the policyholders is the premium sum, including the GST.
Total premium = premium Amount + GST Amount
Using the example:
Total Premium = ₹20,000 + ₹1,800 = ₹21,800
Pay the Total Premium: The policyholder must pay the total premium amount to the insurers, including the base premium and the GST amount. The insurance company will then send the GST component to the government.
Here are some of the benefits of GST in health insurance:
Health Insurance is a shield that protects you and your loved ones in medical emergencies.
A right health insurance plan ensures that a financial crisis is not an issue during a medical emergency.
With the skyrocketing cost of healthcare in the country, opting for a good health Insurance Plan is a smart decision for the safety of the individual and family.
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After implementing GST, new policy buyers and those renewing their policies must pay a higher premium. However, those who purchased policies earlier and for a longer period would not be impacted by GST. Yet, when they renew their plans, their premium will be based on present tax rates.
Though the premium prices for health insurance buyers, there are some advantages of GST to look forward to. .
Due to market competition, health plans are now available at affordable prices. This is a major benefit since healthcare costs are mounting steadily, and high premiums can further increase people's financial burden. Now, that will not happen. Health insurance policies with affordable premiums become highly rewarding.
In addition to this benefit, buyers also experience convenience in terms of seamless processes for buying health policy and hassle-free claim settlement.
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With the implementation of GST, all health insurance buyers are bound to pay additional charges based on the applicable tax rates. Moreover, individuals who have bought health policies cannot avail of input tax credit, and corporate policyholders who have group policies for their employees cannot avail of input tax credit.
Health insurance is crucial for a family's financial protection today. It is essential to realise that by paying the premium, with additional GST charges, you are getting extensive health cover that covers the medical expenditures you are likely to incur.
Get affordable health plans from Care Health Insurance that meet your and your family's specific health needs.
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GST is a single indirect tax levied on different household items, food, textile, home appliances, services, transportation, etc. It has five slabs 0%, 5%, 12%, 18%, and 28%. At present, GST on health insurance is18%.
The GST rate for a family health insurance in India is generally 18%. This implies that when you make a premium payment, 18% of that amount is the GST component.
It has its pros and cons for goods and services. On one side, it removes the interstate movement of goods increase the supply and decreases the prices. On the other hand, it also increases the costs of the goods and services buyers ultimately have to bear.
Yes, GST on health insurance is indirectly tax-deductible for individuals under Section 80D.
The health insurance premium (including GST) paid is eligible for tax deductions under Section 80d of the Income Tax Act, 1961.
Health insurance policies come under services. So, yes, 18% GST on all medical insurance policies is payable, included in the premium.
GST is refundable only when a person sells goods at lower tax rates and pays a higher tax rate. However, an individual paying GST on health insurance is not refundable.
Yes, you can view the GST component you are paying for health insurance premium.
Yes, the health insurance GST rate is applicable in Jammu and Kashmir.
Health insurance premiums attract a GST of 18% under the HSN code 997133.
GST on health insurance premiums is 18%.
#Annual premium for product 'Care' and 'Care Shield (add on)' is Rs. 4286/-(excl. GST) for 1 adult falling under the age bracket 05-24 years.
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^10% discount is applicable for a 3-year policy
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