GST on Health Insurance: Latest Rates, 2.0 Updates, and Exemptions for 2025!

In the financial realm, while you plan your health insurance premiums, it is important to understand why 18% GST is applied on individual, family floater, life-threatening illness, and other policies. As per HSN code 997133, health insurance services fall under the 18% GST slab. But this GST on health insurance is likely to experience a major reform, especially in reducing the cost burden on policyholders.

The blog will guide you through the latest rates, GST 2.0 updates, rules, and exemptions applied to health premiums. Let’s dive in to know more. 

GST 2.0 Update on Health Insurance Premiums!

With GST 2.0, authorities have recommended eliminating the 18% GST on health insurance, keeping the rate at 5% or waiving it entirely. However, the relief is primarily for health insurance policies for senior citizens that propose a complete exemption from the premium, irrespective of the amount. 

These exemptions and transformations still await a final approval, which is likely dependent on the GST council meeting set to happen on 3rd and 4th September 2025, in New Delhi. 

While the policyholders and insurance companies await the final take, let’s scroll down to see the latest rates of GST on health insurance premium.

Rates, HSN Classification, and Who Gets Exempted

Health Insurance Service	HSN Code	GST Rate
Accident and health insurance services of all kinds	997133	18%
Universal Health Insurance Scheme	Heading 9971 or 9991	Nil
The Niramaya Health Insurance Scheme, managed through a Trust formed under the 1999 National Trust Act for the welfare of individuals with Autism, Cerebral Palsy, Intellectual & Multiple Disabilities (44 of 1999)	Heading 9971 or 9991	Nil

Why 18% GST on Health Insurance in India?

What are the Types of GST on Health Insurance? 

1. Central GST (CGST): 

CGST is charged on health insurance premiums when the policy is purchased within the same state. The health insurance GST rate for CGST is 9%.

2. State GST (SGST) Or Union Territory GST (UTGST): 

SGST is imposed by the state government, or UTGST by the union territory administration, on health insurance policies sold within the same state or union territory.  Along with CGST, SGST too is charged at 9%. 

3. Integrated GST (IGST): 

IGST implies interstate health insurance sale by the policy provider in one state or UT to another state or UT. It is generally computed by adding CGST and SGST, which forms a total of 18% GST on health insurance in India. 

Impact of GST on Health Insurance! 

1. The insurance premiums are rising, leading to a financial burden. 
2. Creates uniform tax rules and simplifies the insurance claim procedure.
3. Insurers need to comply with the GST guidelines 
4. The extra tax burden is discouraging middle-class and senior citizens from opting for the plans. 

Why has the Indian Government Proposed Relief on Health Insurance Under GST 2.0? 

1. To promote penetration of health insurance policies in India. 
2. To encourage increased access to protection for senior citizens. 
3. Strengthen household and national resilience. 
4. Tax cuts benefit consumers and increase margins for insurers. 

How to Calculate GST on Health Insurance Premium? 

The calculation of GST on medical  insurance depends on the premium value, and it applies equally to fresh and renewal policies.Here’s how you can calculate it: 

GST Amount = Premium Amount x (18/100) 

For instance, with a premium of ₹25,000 at 18% GST. 

GST Amount = 25000 x (18/100) = 4500 

So, the Total Payable Premium = 25000 + 4500 = ₹29500

GST on Health Insurance: Rules! 

How is Health Insurance GST Rate Charged? 

• Health insurance policies attract an 18% GST rate, which remains fixed for all the slabs. 
• The Goods and Services Tax is imposed exclusively on the policy’s base premium.

Who Pays GST on Health Insurance Premiums? 

• It is the policyholder—whether an individual or a corporate buyer—who pays the GST on premiums. 
• The insurance providers collect the GST amount from the insurers and send it to the government. 

Which are the Taxable Components Falling Under Health Insurance GST rate? 

• Base Premium Amount. 
• Additional riders like critical illness, maternity, accidents, etc. 
• Renewal fees if applied. 

How GST on Health Insurance Affects Renewal Premiums? 

• For policies bought before the implication of GST regulations in India, only renewals are applied with an 18% GST rate. 
• So, they don’t need to amend the service taxes paid for the given Goods and Services Tax rates. 
• While new policies follow the revised tax rules, renewals continue to carry the GST charge on premiums. 

Let’s Conclude! 

The rising cost of insurance premiums raises the need to understand the impact of GST on health insurance. While the burden of paying 18% GST on health insurance premium is passed to the policyholders, the government has proposed relief under GST 2.0. 

GST rates not only impact the insurance penetration but also affect the compliance norms. Until further updates and new health insurance GST rates roll-out, save this blog as a reference. 

Want to know more about GST rates on medical insurance? Leave your comments below. We will surely answer them. 

FAQs of GST on Health Insurance

How to save GST on health insurance? 

Ideally, you can directly save GST applied on health insurance premiums. However, you can claim tax deductions under the section 80 D of the IT act. 

What is the GST rate on health insurance premiums? 

GST on health insurance is 18% applied on base premium. 

Can I claim GST on health insurance Premium? 

GST can’t be directly claimed on the deductions on health insurance, but can be claimed under section 80D of IT Act. 

What was the proposal in the 55th GST council meeting for Health Insurance? 

• GST exemption on health insurance premium for a coverage of up to ₹5,00,00. 
• Reduction of GST on health insurance from 18% to 5% for senior citizens. 

Are there any GST exemptions for health insurance premiums? 

Yes, there are exemptions under GST on medical insurance. Here’s what is exempted. 

• Government sponsored health insurance schemes like universal health insurance and Niramaya health insurance. 
• Health insurance policies given by employers. 
• Health insurance policies for senior citizens.