Zero GST on Health Insurance Premiums

Goods and Services Tax (GST) plays an important role in deciding how much you pay for health insurance. Until now, policyholders have been paying 18% GST on their premiums, which often made insurance slightly more expensive.

Starting September 2025, a new GST reform for health insurance will bring relief to customers. Under this rule, the 18% GST tax rate has been cut down to zero to make health insurance more affordable and accessible for everyone.

Simply put, GST is a tax added to the price of goods and services, including health insurance. The latest change ensures you get better value for money when securing your health. If you are planning to buy or renew a policy, now is the right time to explore your options!

Recent Updates About GST on Health Insurance

A significant change is coming into effect from September 22, 2025, after the 56th GST Council meeting. The individual life and health insurance premiums will now be exempt from the 18% GST.

This change covers a wide range of policy types, including term life insurance, ULIPs, endowment plans, individual health insurance, family floater health plans and senior citizen health insurance policies. Even the renewal of these health insurance plans is included in the tax exemption, making healthcare more accessible for everyone.

For you, this means lower premium payments compared to earlier, making health insurance more affordable and easier to maintain in the long run.

While insurers may lose the benefit of claiming Input Tax Credit (ITC) on their expenses, the bigger win is that you, as a customer, will directly save on the tax portion of your premium. The actual reduction may be around 10-15%, depending on your insurer. But it's still a clear saving on every renewal or new purchase. This update ensures that protecting your health now puts less strain on your pocket.

GST on Health Insurance Premiums: Before vs Now

GST exemption makes a significant impact on health insurance premiums. Here is a comparison of the before and after scenarios to help you understand how the calculation of health insurance premiums works now:

From September 22, 2025, your health insurance premiums will no longer include 18% GST. This makes policies like family floaters, individual health covers, and senior citizen plans more affordable. The savings may not be the full 18% in every case (as insurers lose input tax credit benefits), but you can still expect 10-15% lower outflow on average. If your renewal is coming up, it's smart to schedule it after this date to enjoy the benefit of reduced costs.

Benefits of GST 2.0 Implementation for Policyholders

Lower Premiums

Earlier, every health insurance premium carried 18% GST, which increased the cost for policyholders. For instance, a policy with a base premium of ₹30,000 ended up costing ₹35,400 after tax. With GST removed, you now pay only the base premium—₹30,000. This direct saving makes insurance easier to maintain year after year.

Better Coverage

Many families had to settle for lower coverage because of high premiums. Now, with no GST, the same budget can buy higher coverage. For example, instead of a ₹5 lakh family floater, you may be able to afford a ₹6-7 lakh cover without paying extra. This gives you more protection at the same cost.

Less Expenses

Senior citizens often faced the heaviest premium load due to age-based pricing. A ₹50,000 plan earlier cost ₹59,000 with GST. Now it stays at ₹50,000, leaving ₹9,000 in savings that can be used for medicines or routine health check-ups.

More Insurance Penetration

Younger buyers who delayed getting health insurance because of high costs will find it easier to start now. Plans that are new-buyer-friendly are more affordable without GST, encouraging more people to purchase health insurance and get better financial security against medical emergencies.

Discounts Available with Reliance Health Insurance Plans

With GST on individual health insurance premiums reduced to 0% from September 22, 2025, policyholders can now enjoy even greater savings. On top of paying no tax on your premiums, Reliance Health Insurance is offering higher discounts across its plans, making coverage more affordable and accessible.

​Disclaimer: Premiums and discounts are illustrative and may change depending on several factors. Actual rates may vary based on age, sum insured, policy term, and other conditions. Contact us for exact calculations.

How to Make the Most of the Tax Exemption?

With GST on individual health insurance premiums now 0% from September 22, 2025, you can enjoy savings and better coverage. Here's how you can make the most of it:

1. Buy or Renew After Sept 22 - Ensure your policy start date falls on or after the GST exemption date, i.e., after September 22 2025, to get maximum benefits.
2. Upgrade Coverage - Use the tax savings to increase your sum insured for more comprehensive protection.
3. Choose Family Floaters - Cover your entire family under one plan, making it more cost-effective than multiple policies.
4. Consider Senior Citizen Plans - High premiums for seniors now feel lighter due to the tax relief.
5. Add Optional Covers - Include extra benefits like OPD or critical illness without worrying about GST.
6. Review Existing Policies - Check if your renewal can be scheduled after September 22 to maximise savings.

Key Takeaways

Health insurance premiums in India have traditionally included an 18% Goods and Services Tax (GST), increasing the financial burden on policyholders. However, from September 22, 2025, health insurance premiums are exempt from GST, making policies more affordable and accessible.

This change is particularly important, as health insurance penetration in India remains low, not only due to a lack of awareness but also because many perceive it as an expensive investment. As a result, people avoid getting insured and end up paying the costs out of their pockets. In fact, 48.8% of healthcare expenses are still being paid out of pocket.

But with the GST exemption, even basic plans will become more affordable, making health insurance accessible for all. This ensures people stay protected against medical crises. And by opting for tax-free health insurance, you can reduce your financial strain and ensure better access to necessary medical care.

Reliance General Insurance offers customisable plans with transparent pricing and discounts up to 40%*. We also offer easy policy management through the Reliance Self-i app and quick cashless claims processing at over 10,000+ network hospitals*.

Don't wait for a medical emergency! Secure your future today with our affordable and comprehensive health insurance plans.

FAQs About GST on Health Insurance

• What is GST in Health Insurance?

  GST (Goods and Services Tax) is a consumption-based tax levied on the supply of goods and services in India. In the context of health insurance, GST was previously applied at a rate of 18% on premiums paid for individual policies. This meant that for every ₹100 paid as premium, an additional ₹18 was charged as tax.

  However, with the recent reform announced in July 2025, the GST on individual health and life insurance premiums has been reduced to 0%. This makes health insurance more affordable and encourages more families to get insured.

• Is there GST on health insurance for 5 lakh?

  No, under the new rules, there is no GST on health insurance policies, regardless of the coverage amount. Whether you buy a ₹5 lakh plan, a ₹10 lakh plan, or higher, your premium will not include GST. Earlier, all policies attracted an 18% GST, which significantly increased costs.

  For example, a ​​₹5 lakh family floater with a premium of ₹25,000 required an extra ₹4,500 in GST. Now, you pay only the base premium, making mid-range plans like ₹5 lakh policies more budget-friendly for families.

• How to calculate GST on insurance premiums?

  You no longer need to calculate GST because it is 0% on health insurance premiums. The premium you see quoted by your insurer is exactly what you pay. Previously, you had to add 18% on top of the quoted premium. For example:

  • Old regime: Premium ₹20,000 + 18% GST (₹3,600) = ₹23,600 total.
  • New regime: Premium ₹20,000 + 0% GST = ₹20,000 total.​

This simplified pricing makes it easier for policyholders to compare and budget for health insurance.

You can understand how much the premiums of your chosen health insurance plan will cost by using our health insurance premium calculator. Just enter your age, plan of choice, and sum insured, and it will give you the estimate in an instant.

• ​​What is IT​​C, and why does it matter?

  Input Tax Credit (ITC) allows businesses to claim credit for the GST they pay on purchases and expenses used in their business operations. For insurers, ITC was relevant because they could offset some of the GST paid on input services like medical tests or third-party services.

  While policyholders don't directly claim ITC on individual health policies, the GST cost still made premiums higher. With the GST rate cut to 0%, ITC becomes less significant in the retail health insurance space, since policyholders are no longer paying tax on their premiums.

• Is ITC allowed on insurance?

  For corporate health insurance policies, insurers and employers could previously use ITC to offset some of the GST burden. However, since individual health and life insurance are now tax-free, ITC is not relevant for retail buyers. Businesses offering group health insurance may still need to check the ITC rules, but for individuals, the takeaway is simple: you no longer pay GST, so there's no tax to claim credit on.

• Is the new GST rate on health insurance different across all states?

  No. GST is a centralised tax, meaning the same rate applies uniformly across all states and Union Territories. With the new update, the GST on individual health and life insurance is 0% everywhere in India. Whether you live in Delhi, Mumbai or a smaller town, you'll now benefit equally from this reform. This uniformity ensures fairness and eliminates confusion that could arise from state-level differences.​​​​