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Starting today, individual health insurance premiums are completely exempt from GST—bringing major relief to policyholders across India.
Union Finance Minister Nirmala Sitharaman announced this reform during the 56th GST Council meeting on September 3, with the exemption taking effect from September 22. The move is part of GST 2.0 reforms aimed at making healthcare and insurance more affordable.
💰 What This Means for Policyholders
Until now, health insurance attracted an 18% GST, significantly increasing premium costs. For example, an annual premium of ₹15,000 previously cost ₹17,700 after GST. With the exemption, the same premium will now cost only ₹15,000—saving ₹2,700 each year.
✅ Key Benefits
Immediate savings: Annual premiums drop by up to 18%.
Better planning: Health insurance becomes easier to fit into financial budgets.
Upgrade options: Savings can be directed toward higher coverage or add-ons.
Senior citizen relief: With higher premiums for older individuals, savings are even greater.
📌 Scope of the Exemption
Applies to individual health plans, family floaters, senior citizen policies, and top-up/super top-up plans purchased after September 22.
Employer-provided group health insurance is not included.
🏦 Impact on Insurers
While customers save, insurers lose access to Input Tax Credit (ITC) on expenses like agent commissions, rent, and brokerage fees. This may increase operational costs, potentially leading to modest base premium adjustments (3–6%) at policy renewal. However, as per IRDAI Product Regulations 2024, mid-term hikes are not allowed.
With this reform, individual health insurance becomes more affordable and accessible, but the long-term impact on insurers’ pricing strategies remains to be seen.
