GST for Health Insurance in India: Everything You Need to Know for 2025

Health insurance is becoming essential across Indian households, especially as medical costs rise every year. However, many people are unclear about how taxes are applied to health insurance premiums, particularly about the Goods and Services Tax or GST. Understanding GST for health insurance in 2025 will help you make informed decisions, plan your finances better, and save money the right way.

What Is GST and How Does It Affect Health Insurance Premiums?

The Goods and Services Tax, introduced in India in 2017, is a unified indirect tax levied on most goods and services sold for domestic consumption. In the case of health insurance, GST is applied directly to your premium amount. The current GST rate for health insurance policies is 18 percent in 2025.

When you pay your health insurance premium, the amount includes two parts:

• The basic premium (the coverage cost)
• GST at the prevailing rate, calculated on the basic premium

So, for every renewal or new purchase, your GST contribution goes to the government, while the basic premium is the cost of actual insurance coverage offered by the insurance company.

Did you know? If your base premium is ₹10,000, you pay ₹1,800 as GST alone, making your total premium ₹11,800 per year.

How Much GST Do You Pay on Health Insurance Policies in 2025?

Is GST Uniform for All Health Insurance Plans?

While 18 percent GST is standard on most health insurance plans including individual, family floater, and senior citizen policies exceptions exist for specific government schemes or rural benefit products. Riders and add-ons like critical illness cover also attract the same GST rate of 18 percent.

The GST charged is clearly shown in your premium receipts and is included in the ‘gross premium’ you pay. The amount may change if the government updates tax rates, but in 2025, the 18 percent rate continues as the norm.

Example Calculation:

Can You Claim GST Input Credit on Health Insurance?

If you are an individual buying health insurance for yourself or family, you cannot claim the GST paid as input tax credit (ITC). ITC is meant for businesses to reduce tax liability, not for retail health insurance buyers.

However, enterprises or companies providing group health insurance to employees as a condition of employment may be able to claim ITC on the GST paid, as per the applicable GST rules and subject to certain conditions laid down by tax authorities.

Expert insight: For salaried or self-employed individuals, the GST is a fixed extra outgo over the premium, but business owners should consult a tax expert to check their eligibility for ITC.

Why Is GST Charged on Health Insurance and What Does It Cover?

Is GST Mandatory on All Premium Payments?

Yes, GST is a compulsory indirect tax on health insurance premiums as per the GST Act. It applies to all policyholders except those under exempt schemes like the Central Government Health Scheme (CGHS) and government-sponsored health products.

GST is designed to bring parity among all products and services in India. By including health insurance under its ambit, the government collects revenue to fund different public welfare and healthcare projects.

What Happens If GST Rates Change?

Insurance companies are required to follow all updates related to GST rates promptly. If the government revises the GST rate in future, your next premium payment will include GST at the new rate.

Did you know? Revision of GST rates happens through official government notifications and the new rates are immediately applicable to all new and renewing health insurance policies.

How Does GST Impact the Final Cost of Health Insurance?

Does GST Make Health Insurance More Expensive?

Many policyholders feel the pinch of GST since it raises the cost paid for health cover. For example, a ₹15,000 base policy requires an additional ₹2,700 in GST, making the total cost ₹17,700. Over several years and families with multiple members insured, GST becomes a significant contributor to overall insurance expenditure.

Key highlights:

• GST is always calculated after discount or No Claim Bonus (if offered)
• Any changes in premium due to age, policy upgrades, or add-ons will also increase the GST amount
• GST applies whether you pay premium annually, half-yearly, quarterly, or monthly

Can GST on Health Insurance Be Saved or Reduced?

While individuals cannot directly avoid GST on premiums, you can lower your overall tax outgo by using Section 80D of the Income Tax Act. Under Section 80D, health insurance premiums (including GST portion) can be claimed as tax deduction up to specified limits.

People also ask: Can I claim GST separately in 80D deduction? Answer: The full premium amount paid—including GST—is eligible for 80D deduction. There is no distinction made for GST portion, so you do not need to break up the amounts separately for tax purposes.

Pros and Cons of GST on Health Insurance

What Are the Major Advantages and Disadvantages?

Pros

• Unified and transparent tax structure across all insurers
• Premium receipts clearly show GST paid, aiding in financial planning
• Businesses offering group health insurance can sometimes claim input tax credit
• Ensures parity with other service sectors

Cons

• Increases the net cost of insurance for individuals and families
• Cannot be claimed back by retail buyers
• For those with high coverage or senior citizens, the GST amount can significantly swell premiums

Did you know? Although GST has raised prices, policy comparison through online marketplaces can help you find cheaper base premium options, minimizing total outgo.

How Do Online Marketplaces Help Compare Health Insurance Premiums with GST?

Can You See GST Breakdown While Comparing Plans Online?

Absolutely. In 2025, most online insurance comparison websites and aggregators display the GST portion along with the base premium for all plans you browse. This clarity helps buyers compare not only plain premium amounts but also the final payable cost.

When comparing health insurance online:

• Look for total premium (base plus GST) instead of just base premium
• Platforms showcase plans from multiple insurers; you can filter by premium, coverage, add-ons, and even GST impact
• Many offer detailed quotes that highlight how discount or claims bonus affect GST

Expert insight: Some insurers run temporary discount offers that indirectly lower your GST outgo (since GST applies after discounts). Always check latest offers on online marketplaces before buying or renewing.

Real-Life Experiences: How GST Affects Policyholders in 2025

What Do Actual Health Insurance Buyers Say About GST?

Arjun, a 34-year-old marketing executive from Pune, shares: “My family floater plan’s renewal quote surprised me. The total premium was listed as ₹18,880, but the principal amount was ₹16,000 only. I realized the rest was GST. Had I not checked the premium breakup on the insurer portal, I would not have noticed how much tax I pay every year.”

Maya, a freelancer from Hyderabad, adds: “I use an online comparison site to check renewal options yearly. Even if GST is fixed, by switching to a plan with a lower base premium, I save both on the premium and the GST amount together. It’s simple mathematics but very few people realize its value.”

People also ask: Does GST amount vary for new and renewal policies? Answer: No, the GST rate does not change between new and renewal policies. However, new sum assured or add-ons during renewal can increase both premium and GST.

Key Features or Highlights of GST on Health Insurance 2025

• Rate: Flat 18 percent applicable on base health insurance premium
• Coverage: Applies to all individual, family, senior citizen, and group health insurance policies except government-exempted schemes
• Riders/Add-ons: Same GST rate applies
• Section 80D Cover: Full premium (with GST) is eligible for tax deduction
• Online Transparency: All leading online sellers/platforms show GST portion clearly
• Impact: Adds to premium cost, but helps finance national healthcare initiatives

Comparing Insurers: Sample GST-Added Premiums Across Companies (2025)

Here’s a sample comparison of total premiums, including GST, for a ₹5 lakh sum insured for a 30-year-old in 2025:

These numbers fluctuate based on your city, age, health profile, and coverage needs, but the GST rate remains consistent.

Expert insight: Comparing multiple insurers on a single platform can give visibility into the minimum GST you would pay, per plan and per addon. Always check the breakup before you buy.

Ways to Make Health Insurance with GST More Affordable

How Can You Reduce the Cost Impact of GST?

• Use online comparison to shortlist plans with competitive base premiums
• Opt for higher deductible or copay to lower base and GST
• Club family members under one policy (family floater), instead of multiple individual policies
• Look for long-term multi-year policies; some offer discounted total premiums (affects GST too)
• Claim full eligible deduction under Section 80D, including GST portion

Quick Recap: What Should You Remember About GST for Health Insurance in 2025?

• Paying GST on health insurance is mandatory and is set at 18 percent in 2025
• The GST is calculated on the basic premium for all retail and group health plans
• The premium you pay (base plus GST) is fully eligible for Section 80D deduction
• Online insurance marketplaces provide transparency, allowing you to view and compare plans—including GST components—across multiple insurers in seconds
• You cannot claim GST refund or credit as an individual but planning and comparison can help save on total costs

People Also Ask: Common Queries on GST for Health Insurance

Is GST deductible under Section 80D?

Yes, the GST portion is included in the overall premium eligible for Section 80D tax deduction.

Are all health insurance policies subject to GST?

Most are, except a few government-sponsored or CGHS plans.

Does GST apply on top-up or super top-up health insurance?

Yes, the same 18 percent GST applies on all types of retail health insurance, including top-up and super top-up policies.

Can companies claim GST input tax credit on group health insurance?

Sometimes; only if the group cover is a mandatory employment benefit, and subject to prevailing GST rules.

How do I check the GST included in my premium?

Premium receipts and online policy details show a clear breakup between base premium and GST paid.

Any way to buy health insurance without GST?

Not for standard or private policies. Only select public schemes or certain government insurances remain GST-exempt.

TL;DR or Quick Recap

GST on health insurance in India is 18 percent and must be paid on every policy’s base premium. It increases your total outlay and is not refundable or claimable separately for individuals. Use online comparison sites for complete premium transparency, and remember, the total premium (base plus GST) is eligible for full Section 80D income tax deduction.

Source/References:

• GST Council India
• Income Tax India: Section 80D Rules
• IRDAI Guidelines on Health Insurance