How Does GST Affect My Health Insurance Premium?

Knowing how GST (Goods and Services Tax) affects your health insurance premium is essential for accurate financial planning. GST directly influences the total amount you pay for coverage, either by increasing costs or altering pricing structures.

Knowing how this tax applies helps you compare policies better and make informed insurance decisions. Read on to know about how GST affects your health insurance premium.

What is GST on Health Insurance Policies?

GST (Goods and Services Tax) was levied on the premiums paid for health insurance policies. Previously, it was charged at 18%.

However, following the 56th GST Council meeting (from 22nd September, 2025), all individual health insurance policies, including senior citizen plans, family floater plans, and their reinsurance services, are now completely exempt from GST. It means that policyholders only have to pay the base premium amount without any GST added to it.

Things to Know About GST on Health Insurance Premium

• Premium Prices are Still Increasing: Even after the GST exemption, many policyholders have reported that actual premiums have not dropped much. There is a No Input Tax Credit (ITC) for insurers now that GST has been removed on customer premiums. This indicates that insurers cannot recover from GST paid on operational costs. This is an expense which may be passed back to policyholders.


• Exemptions Do Not Apply to Corporate or Group Policies: It is necessary to note that the 0% GST applicability does not apply to the corporate and group policies. The group health insurance and employer-sponsored policies still remain taxable at the standard GST rate of 18%.

Final Words

The removal of GST on individual health insurance premiums is a landmark reform aimed at making health coverage more affordable. While this policy should lower out-of-pocket costs in theory, real-world pricing by insurers may dilute some of this benefit.