GST on Health Insurance in India 2026: Rate & Benefits

Key Takeaways

• Since 22 September 2025, individual health insurance policies have been fully exempt from GST, reducing the overall premium burden.
• Group and employer health insurance policies continue to attract 18% GST.
• The HSN code for health insurance remains 997133, but the applicable GST rate depends on the policy type.
• No GST is charged on individual health, family floater, and senior citizen health insurance plans.
• GST paid before 22 September 2025 is not refundable, even if the policy continues after the exemption date.
• Businesses can claim ITC on group health insurance only in specific cases, such as when insurance is mandatory under law.
• The GST exemption aims to make health insurance more affordable and increase insurance coverage in India.
• The exemption also applies to reinsurance services linked to individual health insurance policies.

GST Exemption on Health Insurance from September 2025

From 22 September 2025, the GST 2.0 reforms removed GST on eligible individual health insurance policies, marking one of the biggest changes to insurance pricing in years.

Here is what the exemption changed:

• The tax on premiums dropped to nil: The government has exempted individual health insurance premiums from the earlier 18% GST, so you now pay only the base amount. For example, if your premium is ₹20,000, you now pay only ₹20,000 instead of ₹23,600, saving ₹3,600 in GST. 
• Individual life insurance was also exempted: The same reform also removed GST on all individual life insurance policies, not just health cover.
• Reinsurance was included: The exemption also covers the reinsurance of these individual health and life policies.

The government introduced this change to make insurance more affordable and expand coverage across India, supporting the “Insurance for All by 2047” vision.

GST Rate on Health Insurance with HSN Codes

Under the GST framework, health insurance falls under the Harmonized System of Nomenclature (HSN) heading 9971, with the service classified under code 997133. Insurers use this classification to apply the correct tax treatment.

The table below shows the old and new GST rates for each type of policy, along with the applicable code:

Policy Type	Old GST Rate	ew GST Rate	HSN Code	Notes
Individual health (including family and senior citizens)	18%	Exempt	997133	Covers all individual, family floater, and senior citizen plans, including their reinsurance.
Reinsurance for individual health	18%	Exempt	997133	Reinsurance services for individual health insurance policies.
Group or corporate health insurance and its reinsurance	18%	18%	997133	No change, as GST continues to apply to group and corporate policies.
Select government schemes	Exempt	Exempt	9971 or 9991	Includes schemes such as the Universal Health Insurance Scheme and the Niramaya Health Insurance Scheme, which remain exempt.

Note: The HSN code stays the same across policy types, but the GST rate now depends on whether the policy is individual, group, or a government scheme. 

Types of GST on Health Insurance

The GST components below apply only to taxable health insurance policies, such as group and employer health insurance. The government exempts eligible individual health insurance policies from GST, so it does not charge CGST, SGST, or IGST on them.

Tax authorities divide GST into different components based on whether the policy is sold within the same state or across states.  Here are the types of GST that can apply to a health insurance premium:

• Central GST (CGST): Levied by the central government on a policy sold within the same state, charged at 9% of the premium.
• State GST (SGST) or Union Territory GST (UTGST): Levied by the state or Union Territory on the same within-state sale, also charged at 9%, alongside CGST.
• Integrated GST (IGST): Levied by the central government when the insurer and policyholder are in different states, charged at 18%, which equals the combined CGST and SGST rate.

So, a taxable policy sold within a state attracts 9% CGST + 9% SGST, while an inter-state policy attracts 18% IGST.

Example: For a ₹10,000 group health insurance premium:

• Within-state: ₹900 CGST + ₹900 SGST = ₹1,800 GST
• Inter-state: ₹1,800 IGST = ₹1,800 GST

In both cases, the total GST is ₹1,800.

Impact of the GST Exemption on Health Insurance

The GST exemption on individual health insurance has a wide impact, from lower costs for policyholders to changes for insurers.

Here is how the removal of the 18% tax has affected different areas:

• Lower premiums for policyholders: With the 18% tax gone, individuals now pay only the base premium. This directly reduces the cost of buying or renewing an individual, family floater, or senior citizen policy, making health cover more affordable.
• Bigger relief for senior citizens and families: The percentage-based discount helps people with higher premiums, such as senior citizens and families, save more. 
• Higher insurance penetration: Lower premiums encourage more people to buy adequate cover, supporting the government’s goal of expanding insurance access. 
• Impact on insurance companies: When a service becomes exempt, the insurer can no longer claim Input Tax Credit (ITC) on its own costs, such as technology and administrative expenses. Insurers absorb this cost, though most have not raised base premiums so far.
• Anti-profiteering monitoring: The government monitors insurers to ensure they pass on the GST benefit to policyholders through reduced premiums.

How to Calculate GST in Health Insurance?

Calculating GST on a health insurance premium is simple (if it still applies). As GST is charged on the base premium, you only need to multiply the base premium by the applicable rate and add it to the base amount. 

The formula is:

GST amount = Base premium × GST rate
Total premium payable = Base premium + GST amount

For example, on a group health policy with a base premium of ₹20,000 taxed at 18%:

• GST amount: ₹20,000 × 18% = ₹3,600
• Total premium payable: ₹20,000 + ₹3,600 = ₹23,600

For a within-state policy, this 18% is split as 9% CGST and 9% SGST, while an inter-state policy is charged 18% IGST. The total works out the same either way.

When Does the GST Exemption on Health Insurance Apply?

Under Section 14 of the CGST Act, GST is determined by the date of supply, invoice, and payment. So, any eligible individual’s health insurance premium paid on or after 22 September 2025 is exempt from GST, even if the policy started earlier. Here is how the timing works:

• Premium paid on or after 22 September 2025: The premium is exempt, and no GST is charged.
• Premium paid before 22 September 2025: The old 18% GST applies, even if the policy period runs past the exemption date.
• Renewals: An individual policy renewed with payment on or after 22 September 2025 is exempt, so your renewal premium carries no GST.
• Reinstated policies: A lapsed individual policy that is revived on or after 22 September 2025 is also exempt.
• Instalment premiums: Each instalment is taxed based on its payment date. Earlier instalments are taxable, while later eligible ones are exempt.

Note: You cannot claim a refund for GST paid on premiums settled before 22 September 2025. If you paid a premium with 18% GST before that date, the government will not refund the tax, even if the policy continues into the exemption period.

Can You Claim GST Input Tax Credit (ITC) on Health Insurance?

ITC allows businesses to reduce their GST liability by claiming credit for the GST paid on eligible business expenses. However, health insurance is not always eligible for ITC. Whether you can claim it depends on who is insured and the type of policy. Here’s how it applies: 

• Individual policyholders: You cannot claim ITC on a personal health insurance policy because it is a personal expense. Also, the government exempts individual health insurance from GST, so insurers charge no GST on eligible premiums, and policyholders cannot claim ITC. 
• Employers on group policies: ITC on employee health insurance is generally blocked under Section 17(5)(b) of the CGST Act. So, businesses usually cannot claim the 18% GST paid on a group policy. Businesses that are new to compliance can start with GST registration before managing ITC in their policies. 
• The legal-mandate exception: A business can claim ITC when a law in force makes providing the insurance mandatory. In such cases, the employer may claim the GST paid on the group policy.

Your employer pays the 18% GST on a workplace group policy as part of the premium; they do not deduct it from your salary. To work out the tax on a group policy premium, you can use a GST calculator for a quick estimate. 

Evolution of GST on Health Insurance: Before vs After

The tax on health insurance has changed several times over the years, ending with the current exemption for individual policies. Looking at how it evolved shows just how significant the latest change is. Here is how the tax on health insurance has moved:

Period	Tax on Individual Health Insurance
Before July 2017	15% service tax (including cesses)
July 2017 to 21 September 2025	18% GST
From 22 September 2025	Exempt (0%)

From 22 September 2025, GST on individual health insurance dropped to 0%, creating significant savings for policyholders. Want to know how this change affects your premium and tax rules? Get the latest updates and expert guidance with RegisterKaro. Contact us today for reliable GST assistance!

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