A year after the GST exemption for health insurance, have premiums actually come down?
Yes, the removal of GST has reduced what you pay for health insurance, because the 18% tax added to the premium is now gone. From 22 September 2025, individual and family health insurance is GST-free, so the final bill is lower even when the base price remains unchanged.
What is the GST Rate on Health Insurance Now?
The GST rate on health insurance is now zero for individual and family plans, down from 18%. The change came in at the 56th GST Council meeting and applies from 22 September 2025. It covers individual, family floater, and senior citizen policies.
Before this, every premium carried 18% tax on top of the base price. That tax is what has been removed, so the amount leaving your pocket is smaller.
Why Does Zero GST Lower Your Health Insurance Premium?
Zero GST lowers your health insurance premium because the 18% tax added on top is no longer applied. The insurer sets a base price, and earlier, the tax was added to it. Remove the tax, and you pay only the base.
For example, suppose your base premium is 30,000 rupees. Earlier, you paid 35,400 with 18% GST added; now you pay 30,000, saving about 5,400 a year. A health insurance plan for the family sees the same drop in its base price.
What is the Input Tax Credit in Health Insurance?
The input tax credit in health insurance is the tax insurers use to recover their own costs. With GST removed from your premium, insurers can no longer claim this credit, which increases their costs slightly. Some may lift the base price slightly to make up for it.
So the savings may be a touch less than a clean 18%. Even then, the net effect is a lower bill than before, because you no longer pay any tax.
Does Group Health Insurance Still Pay GST?
Yes, group health insurance still pays 18% GST, unlike individual and family cover. The exemption applies to retail policies purchased by an individual or a family, not to employer group plans. So a company covering its staff still pays the tax.
If you have coverage through an employer, this change does not lower that premium. Your own individual policy, bought separately, is where the drop shows up.
Should You Renew Health Insurance After Zero GST?
Yes, renewing your health insurance after zero GST locks in the lower price. When your policy comes up for renewal, the new premium should show no tax on top, so confirm the amount before you pay. It is a good moment to look at your cover too.
A health insurance plans for family plan is now cheaper to hold, so you might use the savings to raise your coverage. Buying or renewing after the change means you pay the tax-free price from day one.
