The Goods and Services Tax (GST) Council’s decision to exempt certain health insurance policies from GST, effective September 22, 2025, has brought relief to policyholders. Previously, health insurance premiums were taxed at 18%, increasing costs for individuals and businesses.
Exempted Policies
- Individual Health Insurance: Policies covering individuals or families, including retail health plans, are exempt from GST. This includes coverage for hospitalization, critical illness, and outpatient treatments.
- Government-Sponsored Schemes: Policies under schemes like Ayushman Bharat, PMJAY, or state-level health programs are fully exempt.
- Senior Citizen Plans: Health insurance tailored for individuals aged 60 and above qualifies for exemption, addressing affordability for the elderly.
- Group Health Insurance for Non-Corporate Entities: Policies provided by non-profit organizations, trusts, or small businesses (turnover below ₹20 crore) are exempt.
Non-Exempt Policies
- Corporate Group Insurance: Group policies offered by companies with a turnover exceeding ₹20 crore remain taxable at 18% GST.
- Add-On Covers: Standalone add-ons (e.g., maternity or wellness benefits) not part of a comprehensive health plan may still attract 18% GST unless bundled with an exempt policy.
- Top-Up Plans: High-deductible or super top-up plans are taxable unless explicitly linked to an exempt base policy.
FAQs
The GST exemption on health insurance premiums is effective from 22nd September 2025, as announced by the GST Council.
No, group policies by companies with turnover above ₹20 crore are taxable at 18% GST.
Renewals or premiums paid before the effective date are taxed at 18%. No refunds apply.
No, ITC is not available for inputs related to exempt policies, which may impact premium costs.
Yes, if part of an individual or family health insurance policy, they are exempt.
Top-up plans are taxable unless linked to an exempt base policy.
