Health insurance is an essential financial tool for protecting oneself from rising medical costs. However, while evaluating the premiums, one component that often confuses many policyholders is the Goods and Services Tax (GST) applicable to health insurance. In this comprehensive guide, we break down everything you need to know about GST on health insurance — what it is, how it affects your premium, exemptions (if any), and how to claim tax benefits.
What is GST on Health Insurance?
GST, or Goods and Services Tax, is an indirect tax levied on the supply of goods and services in India. Since July 1, 2017, GST replaced multiple cascading taxes like service tax, VAT, and excise duty. Health insurance, being a service, is subject to GST.
The current GST rate on health insurance premiums is 18%. This means, when you buy a health insurance policy or renew an existing one, the insurer adds 18% GST to your base premium.
Example:
If your base premium is ₹10,000, then:
- GST @18% = ₹1,800
- Total premium payable = ₹11,800
This additional GST component directly increases the cost of your health insurance plan.
Why is GST Applicable to Health Insurance?
Health insurance falls under the service category. According to GST law, all insurance services (life, general, and health insurance) attract 18% tax under the standard rate for services. Although health insurance serves a social welfare purpose, it is not exempt from GST like certain government healthcare schemes or education services.
Types of Health Insurance and How GST Applies
Understanding the types of health insurance available in India is key to knowing how GST affects each one. Here’s a breakdown:
1. Individual Health Insurance
This plan covers a single person and is the most commonly purchased type of policy.
- GST Impact: 18% GST is added to the base premium.
Example: ₹12,000 base premium → ₹2,160 GST → Total: ₹14,160
2. Family Floater Health Insurance
A single sum insured is shared among family members (spouse, children, parents).
- GST Impact: GST is charged on the total premium amount for the family coverage.
Benefit: Still eligible for 80D tax deductions, including GST.
3. Senior Citizen Health Insurance
Specifically designed for individuals above 60 years of age with age-related medical concerns.
- GST Impact: 18% GST is applicable just like any other plan.
Note: Premiums are generally higher, and so is the GST component.
4. Group Health Insurance
Usually provided by employers to their employees as a workplace benefit.
- GST Impact: The employer pays the GST-inclusive premium.
- Claimable?: Employees do not get individual tax benefits, but companies may treat it as a business expense.
5. Top-Up and Super Top-Up Plans
These plans act as an additional buffer after a threshold (deductible) is crossed.
- GST Impact: GST is applied on the premium just like base health policies.
Tip: Economical for higher cover, but include GST while comparing plans.
6. Critical Illness Insurance
This plan provides a lump sum if the insured is diagnosed with a serious illness like cancer or stroke.
- GST Impact: 18% GST is applied on the one-time or annual premium.
- Tax Benefit: Full premium including GST is eligible for deduction under 80D.
7. Personal Accident Insurance (Health-related)
Provides coverage for accidental death or disability.
- GST Impact: 18% GST is applicable, as it is classified under general insurance.
- Tax Benefit: Can be included in 80D if it covers medical expenses.
Can You Claim a Tax Benefit on GST Paid for Health Insurance?
Yes, while you cannot claim a refund of the GST paid on your health insurance premium, you can include the total premium (inclusive of GST) for tax deductions under Section 80D of the Income Tax Act.
Section 80D Limits:
- ₹25,000 for self, spouse, and dependent children
- ₹50,000 for senior citizen parents
- Total deduction limit: Up to ₹1 lakh if you’re paying for yourself and senior citizen parents
So, even though you’re paying an 18% GST, the good news is — it counts as part of your premium for claiming tax benefits.
Is There Any GST Exemption on Health Insurance?
As of now, there is no GST exemption for regular health insurance policies purchased by individuals. However, health insurance under some government schemes (like Ayushman Bharat or ESI) may be exempt since these fall under welfare programs.
Also, if the health insurance is part of a package where the employer pays the premium, the GST becomes part of business expense claims for the company (but not for employees).
Impact of GST on Policyholders
Here’s how GST on health insurance affects you as a customer:
- Increases premium cost by 18%
- Makes long-term plans slightly costlier
- Can still be claimed under Section 80D
- No GST refunds for individual buyers
No reduction even for senior citizens
How to Save on GST While Buying Health Insurance?
While you can’t directly reduce or avoid GST, you can optimize your total premium outgo:
1. Buy multi-year policies – Some insurers offer a discounted premium if you pay upfront for 2–3 years. Though GST is charged upfront, you save on base premium costs.
2. Compare plans online – Use online health insurance calculators to compare premiums (including GST).
3. Utilize Section 80D fully – Claim the entire premium amount (including GST) as a deduction to reduce your taxable income.
Final Thoughts
Understanding GST on health insurance is essential for every policyholder. While it may seem like an extra financial burden, being aware of how GST works and how it affects your policy cost can help you make informed decisions. Always consider GST when budgeting for premiums and use tax benefits under Section 80D to your advantage.
By staying informed, you don’t just protect your health — you also ensure your financial well-being.
Frequently Asked Questions
The GST (Goods and Services Tax) on health insurance is 18%. So, if your premium is ₹10,000, you’ll pay ₹1,800 as GST, making the total cost ₹11,800.
Always check if the GST is already included when you compare plans.
No, you can’t get the GST back as a refund. But the good news is — you can include the total premium (with GST) when you claim a tax deduction under Section 80D.
So even though you pay GST, you can still save money on your income tax.
Yes, senior citizens also pay 18% GST on their health insurance plans. There is no special discount on GST for older people.
But, you can claim a tax deduction of up to ₹50,000 for premiums paid for senior citizen parents under Section 80D.
No, the GST rate is the same — 18% for both individual and family floater plans. The GST amount just depends on the total premium.
Example:
- Individual plan of ₹10,000 → GST is ₹1,800
- Family plan of ₹25,000 → GST is ₹4,500
You can’t avoid GST, but here’s how to reduce your total cost:
- Choose 2- or 3-year plans to get discounts
- Buy your plan online for better offers
- Claim full tax benefits under Section 80D
Try to get a lower base premium — that way, you pay less GST.
Standard T&C Apply
Disclaimer: This information is only for learning purposes. GST rates, tax benefits, and insurance coverage can change depending on the insurance company, government rules, or your personal situation. Please talk to a financial advisor or your insurance company before making any decisions.
