Last updated: July 2026 | Written by Ashish Kumar, Founder at BusinessBuilts
If you bought or renewed a health insurance policy recently, you probably noticed something on your premium receipt looks different. That 18% GST line item that used to eat into your budget every year? For most individual policyholders, it’s gone.
Here’s the quick answer: GST for health insurance is Nil for individual policies as of 22nd September 2025. If you’re buying or renewing an individual, family floater, or senior citizen health plan, you pay only the base premium, no tax added on top. If you’re searching for clarity on gst for health insurance in 2026, that’s the single most important fact to know before anything else.
But that one-line answer doesn’t tell you the whole story. Group insurance still attracts 18% GST. Some insurers haven’t passed on the full benefit. And there’s a tax-credit rule buried in the fine print that explains why your premium might not have dropped by exactly 18%, even though the tax rate did. If you want the full breakdown of gst on health insurance rules by policy type, or you’re comparing terms like gst on medical insurance, this guide covers both.
Let’s break down everything you actually need to know, whether you’re buying your first policy, renewing an old one, running payroll for a small team, or just trying to make sense of your insurer’s latest bill.
What Is GST for Health Insurance?
GST, or Goods and Services Tax, is the tax charged on the value of a service in India. Health insurance premiums have always counted as a taxable service, which meant every rupee you paid your insurer used to include a government tax on top of the actual cost of your cover.
Before GST existed, this same charge was a 15% service tax. When GST replaced it in 2017, the rate jumped to 18%. For eight years, anyone buying health insurance paid an extra 18% on their premium, no exceptions, no relief.
That changed in September 2025. The GST Council, which decides tax rates for the whole country, removed this tax entirely for individual health insurance buyers. It’s one of the more meaningful tax reliefs to hit personal finance in recent years, especially with medical costs climbing every year.
Latest GST Rate for Health Insurance (2026 Update)
Understanding gst for health insurance starts with one date: 22nd September 2025. For a broader look at gst for health insurance in india across all policy categories, this section is your starting point.
At the 56th GST Council meeting, held in early September 2025 and led by Finance Minister Nirmala Sitharaman, the council approved a sweeping change: GST on individual health and life insurance premiums would drop from 18% to Nil, effective 22nd September 2025.
Here’s how the rate actually breaks down by policy type:
| Policy Type | GST Rate | HSN Code | Notes |
| Individual health insurance | Nil | 997133 | Includes new purchases and renewals |
| Family floater plans | Nil | 997133 | Applies to the whole policy premium |
| Senior citizen health insurance | Nil | 997133 | Same treatment as individual plans |
| Top-up and super top-up plans | Nil | 997133 | Follows individual policy rules |
| Critical illness and personal accident (individual) | Nil | 997133 | Falls under the same reform |
| Group/employer health insurance | 18% | 997133 | Unchanged by the reform |
| Government scheme policies (Ayushman Bharat, CGHS, Niramaya) | Nil (Exempt) | N/A | Separate exemption, existed before 2025 too |
One thing worth clarifying directly, because there’s been some confusion online: this Nil rate isn’t a temporary discount or a “5% concession.” It’s a full removal of GST on individual health insurance premiums, and it applies to both fresh purchases and renewals, as long as the payment falls on or after 22nd September 2025. If you’ve seen conflicting numbers floating around, go by this: individual health insurance is taxed at 0% right now, not 5%, not 12%. Group insurance is the one that stayed at 18%.
If you’re buying through BusinessBuilts, every quote you see already reflects this updated GST treatment, so the number on your screen is the number you actually pay.
How the GST Exemption Affects Your Premium (With Real Examples)
Every gst for health insurance premium calculation comes down to one simple rule now: base premium, no tax added. Numbers make this a lot easier to picture. Here’s what the GST removal means in rupees across a few common premium bands.
Example 1: A young professional buying a ₹10,000 policy Old cost with 18% GST: ₹11,800 New cost with Nil GST: ₹10,000 You save: ₹1,800 a year
Example 2: A family floater plan at ₹25,000 Old cost with 18% GST: ₹29,500 New cost with Nil GST: ₹25,000 You save: ₹4,500 a year
Example 3: A family floater with a ₹50,000 base premium Old cost with 18% GST: ₹59,000 New cost with Nil GST: ₹50,000 You save: ₹9,000 a year
Example 4: A senior citizen policy at ₹1,00,000 Old cost with 18% GST: ₹1,18,000 New cost with Nil GST: ₹1,00,000 You save: ₹18,000 a year
That last example matters a lot for families managing coverage for aging parents. Senior citizen premiums are usually the highest in any household’s insurance spending, so the rupee savings there are the biggest too.
Want to see your exact premium under the new GST rate? Compare live quotes on BusinessBuilts’ premium calculator and check the final price before you commit. (Swap in your live calculator URL here.)
Why your premium might not have dropped by exactly 18%
Here’s the part most articles on this topic skip over entirely, and it’s worth understanding before you assume your insurer is shortchanging you. This is where most gst for health insurance premium confusion comes from.
When a service becomes Nil-rated under GST, the business providing that service loses something called Input Tax Credit, or ITC. Insurers use ITC to offset the GST they pay on their own operating costs, things like office rent, software subscriptions, and reinsurance. Once your premium is Nil-rated, insurers can no longer claim that credit back.
To absorb this loss, some insurers have quietly adjusted their base premiums upward, or trimmed agent commissions, rather than passing on the full 18% cut to customers. This isn’t universal and it isn’t dramatic, but it explains why some policyholders are seeing savings closer to 12-15% instead of a clean 18%.
The takeaway here isn’t to worry. You’re still saving real money compared to what you paid before September 2025. It just means the savings you see might be a touch lower than a simple 18% calculation would suggest, and that’s the insurer absorbing a cost, not overcharging you.
GST for Individual vs. Family Floater vs. Senior Citizen Plans
All three of these fall under the same Nil-GST bracket, but each comes with its own practical nuance worth knowing.
Individual plans are the simplest case for any gst for health insurance policy. One person, one premium, Nil GST applies cleanly from the moment your policy start date (also called the Risk Commencement Date) falls on or after 22nd September 2025.
Family floater plans cover multiple family members under a single sum insured, and the GST exemption applies to the entire premium, not per-person. So if you’re covering yourself, your spouse, and two kids under one floater plan, the whole premium is Nil-rated, not just a portion of it.
Senior citizen health insurance carries the same Nil rate, but the savings hit harder in absolute terms because base premiums for this age group are naturally higher, given the increased likelihood of claims. If you’re managing your parents’ health cover, this is where the reform genuinely makes a dent in your annual outgo.
If you’re comparing options across these three categories, BusinessBuilts’ plan comparison tool lets you filter by policy type and see the GST-inclusive final price side by side, so there’s no guesswork involved.
GST for Group Health Insurance (For Employers, HR & Small Business Owners)
This is the part that catches a lot of small business owners off guard, because the reform everyone’s talking about simply doesn’t apply here.
Group health insurance, the kind employers buy to cover their staff, still attracts 18% GST. The September 2025 reform was specifically carved out for individual policyholders, and group cover was left untouched.
It gets a little more complicated for businesses trying to claim that 18% back through Input Tax Credit. Under Section 17(5)(b) of the CGST Act, ITC on employee health insurance is blocked by default. There are two narrow exceptions:
- If providing health insurance to employees is legally mandatory under a law like the Factories Act, or under specific safety regulations for hazardous occupations, ITC becomes available.
- If the health insurance is bundled as part of a composite supply to a registered customer, which is a fairly rare situation outside standard employee benefits.
For most small businesses and startups, none of these exceptions apply, which means the 18% GST on your group policy is a direct, non-recoverable cost sitting on top of your premium every year. If your annual group health insurance premium is ₹5 lakh, you’re paying ₹5.9 lakh out the door, and none of that ₹90,000 in GST comes back to you.
If you’re a freelancer or self-employed professional weighing whether to buy an individual policy or set up a small-team group plan, this is a real factor to run the numbers on. An individual policy at Nil GST might genuinely work out cheaper than a group plan carrying 18%, depending on your team size and risk profile.
Not sure whether an individual plan or a group policy works out cheaper for your team? Talk to a BusinessBuilts advisor and run the numbers side by side before you commit.
GST and Section 80D Tax Deduction: How They Interact
Section 80D of the Income Tax Act lets you claim a deduction on health insurance premiums, up to ₹25,000 for yourself and your family, and up to ₹50,000 if you’re paying for senior citizen parents.
A question that comes up a lot since the GST change: does a lower premium mean a smaller tax deduction?
Here’s the honest answer. The 80D deduction has always applied to the premium you actually pay, GST included. So if your old premium was ₹29,500 (₹25,000 base plus ₹4,500 GST), that full ₹29,500 was eligible for deduction, up to the applicable cap. Now that GST is Nil, your premium is simply ₹25,000, and that’s the amount you claim.
In practice, this doesn’t reduce your tax benefit at all, since most policyholders were already claiming the maximum deduction cap anyway (₹25,000 or ₹50,000), regardless of whether GST pushed their total premium above that threshold. If your premium was already comfortably within the cap, you’ll just be paying less out of pocket for the same deduction. The only people who might notice a difference are those whose premium plus GST used to just barely exceed the cap and now falls a little under it, but even then, the actual claimable amount rarely changes.
How to Check If Your Insurer Applied the Correct GST
If you’re renewing a policy or just bought one, it’s worth spending two minutes confirming your insurer got the GST treatment right. Here’s what to check:
- Look at your premium breakup. Your renewal notice or policy schedule should show a clear split between base premium and GST. For individual policies renewed after 22nd September 2025, the GST line should read Nil or ₹0.
- Check your policy start date, not just your payment date. GST applicability depends on both when you paid and when your policy’s Risk Commencement Date falls. Here’s how the combinations work out:
| Payment Date | Policy Start Date | GST Applicable? |
| On or after 22 Sept 2025 | On or after 22 Sept 2025 | No |
| Before 22 Sept 2025 | On or after 22 Sept 2025 | No |
| Before 22 Sept 2025 | Before 22 Sept 2025 | Yes, 18% |
| After 22 Sept 2025 | Before 22 Sept 2025 (rare edge case) | Check with insurer directly |
- If GST is still being charged incorrectly, raise it with your insurer’s grievance cell first. Most resolve this quickly since it’s a straightforward compliance issue, not a judgment call. If you don’t get a response, IRDAI’s Bima Bharosa portal lets you file a formal grievance against any insurer operating in India.
- Remember this only applies to future premiums. If you paid GST on a multi-year policy before the reform, that amount isn’t refundable. The exemption only kicks in from your next payment onward.
GST for Other Insurance Types (Quick Reference)
Health insurance isn’t the only policy type affected by the September 2025 reform, and it’s worth knowing where the lines are drawn if you’re managing a full insurance portfolio.
| Insurance Type | GST Rate |
| Individual life insurance (term, ULIP, endowment) | Nil |
| Individual health insurance | Nil |
| Group health insurance | 18% |
| Motor insurance | 18% |
| Travel insurance (individual) | 18% |
| Personal accident insurance (individual) | Nil |
Life insurance got the same treatment as health insurance, which makes sense since both were part of the same council decision. Motor and travel insurance weren’t touched, so don’t expect a similar drop there.
Frequently Asked Questions
Is GST applicable for health insurance in 2026?
No, not for individual health insurance. GST for individual health insurance premiums, including family floater and senior citizen plans, has been Nil since 22nd September 2025. Group health insurance still attracts 18% GST.
What is the current GST rate on individual health insurance?
The current rate is Nil (0%). This applies to new purchases and renewals where the payment and policy start date fall on or after 22nd September 2025.
Does GST apply to group or employer health insurance?
Yes. Group health insurance continues to attract 18% GST, and this wasn’t changed by the 2025 reform. Input Tax Credit on this amount is also blocked for most employers under Section 17(5)(b) of the CGST Act.
Will my renewal premium automatically reflect the new GST rate?
Yes, as long as your renewal payment and policy start date both fall on or after 22nd September 2025. You don’t need to submit any paperwork or request to get this benefit, it applies automatically.
Can I get a refund of GST already paid on a multi-year policy?
No. GST paid before the reform on multi-year premiums isn’t refunded. The Nil rate only applies going forward, from your next premium payment.
Does removing GST affect my Section 80D tax deduction?
Generally no. Most policyholders were already claiming the maximum 80D cap regardless of GST, so a lower premium simply means less out-of-pocket spend for the same deduction benefit.
Is GST charged on the no-claim bonus?
No. As clarified by CBIC Circular 186/2022, no-claim bonus is deducted before calculating the taxable value, so it was never subject to GST, even before the 2025 reform.
Health insurance pe GST lagta hai kya abhi?
Individual health insurance policy pe ab GST nahi lagta. 22 September 2025 se individual, family floater aur senior citizen plans pe GST Nil ho gaya hai. Haan, agar aap group health insurance le rahe ho (jaise company ki taraf se), usme abhi bhi 18% GST lagta hai.
Renewal pe naya GST rate automatic apply hoga ya khud request karna padega?
Bilkul automatic hai. Agar aapki renewal payment aur policy start date dono 22 September 2025 ke baad hai, to GST khud hi Nil dikhayega. Koi form fill karne ki zarurat nahi, koi insurer ko call karne ki zarurat nahi.
Purani policy pe jo GST pay kiya tha, wo wapas milega kya?
Nahi, ye refund nahi hota. Ye rule sirf aage ki payments pe lagu hota hai, matlab jo bhi GST aapne pehle pay kar diya hai wo wapas nahi aayega. Lekin agli renewal se aapko full benefit milega.
Agar mera premium 18% se kam gira, to kya insurer galat kar raha hai?
Zaroori nahi. Insurance companies ab apne khud ke expenses pe Input Tax Credit (ITC) claim nahi kar sakti, isliye kuch companies ne apna base premium thoda badha diya hai is loss ko cover karne ke liye. Isliye aapka premium exactly 18% kam nahi, balki 12-15% ke around bhi gir sakta hai. Ye normal hai, koi cheating nahi hai.
80D tax benefit pe is GST change ka kya asar padega?
Zyada asar nahi padta. Zyadatar log pehle se hi maximum 80D limit (₹25,000 ya senior citizens ke liye ₹50,000) claim kar rahe the, GST ke saath ya bina. Ab premium kam hone se aapki jeb se kam paisa jayega, lekin tax deduction ka benefit waisa ka waisa rehta hai.
About the Author
Ashish Kumar is the founder and lead writer at BusinessBuilts, where he covers business, personal finance, banking, insurance, taxation, and investing for Indian readers. He has spent many years researching and writing about India’s financial systems, government schemes, and consumer finance topics, with every article fact-checked against official sources like RBI, IRDAI, and CBIC before publishing. Ashish focuses on turning confusing financial and regulatory information into practical, jargon-free guidance readers can actually act on. Based in Baghpat, Uttar Pradesh, he founded BusinessBuilts to close the gap between complicated official documentation and what everyday Indians actually need to know.
