GST on Medical Insurance

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GST on Medical Insurance is 0% for individual health insurance policies and 18% for group or corporate health insurance plans, effective from 22 September 2025. This health insurance GST change applies to mediclaim policies, family floater plans, and hospitalisation insurance purchased by individuals. You encounter this medical cover tax when buying or renewing a health policy or adding riders. Earlier, health premium GST was 18%, but the 56th GST Council removed GST on individual policies to improve affordability. This GST slab for health plans directly reduces your premium cost and supports wider insurance adoption.

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GST Rate on Medical Insurance at a Glance

The GST structure for health insurance depends on policy type.
This reflects updated healthcare tax rules under GST reforms.
GST on individual health policy: 0%
GST on family floater plans: 0%
GST on corporate/group health insurance: 18%
GST on health riders (individual policies): 0%
GST on group policy add-ons: 18%
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Rate by Health Insurance Type: Quick Reference

  1. Policy Type

    1. Individual mediclaim policy
    2. Family floater plans
    3. Corporate/group insurance
    4. Health riders (individual)

  2. GST Rate

    1. 0%
    2. 0%
    3. 18%
    4. 0%

  3. What It Means for You

    1. No GST on premium — lower cost
    2. Affordable coverage for families
    3. Higher cost for employer-provided cover
    4. Add-ons remain GST-free
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What the Rate Means for Your Premium Cost

  • GST removal has a direct financial impact.
  • If your Mediclaim premium is ₹25,000, earlier GST at 18% added ₹4,500, making the total ₹29,500. Now, with 0% GST, you pay only ₹25,000.
  • This makes health insurance significantly more affordable and improves access to coverage.
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GST on Health Policy Components and Riders

GST treatment depends on the type of policy and add-ons.
This ensures consistent mediclaim billing GST treatment based on policy category.
Individual policy premium: 0% GST
Hospitalisation insurance GST: 0%
Wellness insurance GST: 0%
Health riders GST (critical illness, accident riders): 0%
Corporate policy riders: 18% GST
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How to Calculate GST on Medical Insurance

For individual policies:

Total Premium = Base Premium (No GST)

For group policies:

Total Premium = Base Premium × (1 + 0.18)

Example:

Corporate policy premium ₹1,00,000 → ₹1,18,000 total

GST is shown separately in insurance billing.

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Impact of GST on Health Insurance Premiums

GST reforms have significantly changed pricing.
However, group health insurance continues under the 18% GST structure.
Earlier: 18% GST increased premium cost
Now: 0% GST reduces premium by up to 18%
Improves affordability for individuals and families
Encourages wider insurance penetration
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Input Tax Credit (ITC) on Medical Insurance

ITC rules depend on policy type.
This is important for insurer health compliance and GST input for firms.
ITC is not available on individual health insurance (GST-exempt)
ITC is available on group/corporate policies (18% GST)
Businesses can claim ITC when insurance is used for employee benefits
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GST Benefits for Medical Insurance Buyers

The GST framework now offers clear advantages.

The GST framework now offers clear advantages.
Zero GST reduces health premium GST burden
Simplified mediclaim billing GST structure
Lower out-of-pocket insurance cost
Supports healthcare accessibility
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Why GST Matters for Your Health Insurance Purchase

GST directly impacts your premium and planning.

Before purchasing, you should:
This helps you optimise cost and benefits under healthcare tax rules.
Check if your policy is individual or group
Confirm GST applicability (0% or 18%)
Review riders and add-on tax treatment
Evaluate renewal timing after GST reform
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GST Reforms 2.0 on Medical Insurance

The 56th GST Council introduced a major reform by reducing GST on individual health insurance from 18% to 0%, effective 22 September 2025. This was done to make healthcare coverage more affordable and accessible across India.

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Additional Costs to Consider

GST is only one part of your insurance cost.
These affect your total mediclaim benefits and expenses.
Hospital network charges
Co-payments and deductibles
Policy renewal fees
Add-on coverage costs
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FAQs

What is GST on medical insurance?
GST on medical insurance is 0% for individual policies and 18% for group insurance plans.
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Does GST apply on health riders?
No, health riders are GST-free when part of individual policies. They attract 18% only in group policies.
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Why did premiums increase after GST earlier?
Before September 2025, 18% GST was applied on premiums, increasing total cost. This has now been removed for individuals.
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Is GST applicable on health claims?
No, GST is not applied on insurance claim payouts. It applies only to premiums.
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Can GST be claimed for corporate health policies?
Yes, businesses can claim ITC on group health insurance premiums since they are taxed at 18%.
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Disclaimer

Shriram Finance strives to provide accurate and timely information about its products and services on its website and related platforms. Details mentioned here may vary from institution to institution and based on the customer profile. The content presented is intended for general informational purposes only and should not be considered a substitute for official product or service documentation. In cases of discrepancy, the terms specified in the official product or service documents will take precedence. Users are encouraged to consult with qualified professionals before making any decisions based on the information provided. Please review our Disclaimer page for detailed terms and conditions before making any financial decisions.

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