GST on Medical Insurance: Latest Rates, Impact, Benefits & Tax Rules

Understanding the GST on medical insurance is crucial for anyone who wants to buy a health insurance policy and plan their finances efficiently. Since GST directly affects premium amounts, staying updated on the latest rates and regulations helps individuals make better decisions.

In this detailed guide, we explain the current GST rate on health insurance, how it impacts premiums, tax benefits, and everything you need to know.

What Is GST on Medical Insurance?

GST on medical insurance refers to the Goods and Services Tax applied to health insurance premiums. Like other financial services, health insurance also falls under the GST framework, and customers must pay the tax along with their regular premium.

Currently, the GST rate on health insurance is 18%.

Latest GST Rate on Medical Insurance (2025)

How GST Impacts Your Medical Insurance Premium

When the GST rate increased to 18%, the total cost of health insurance policies also rose. The tax is applied directly to the base premium, making the final payable amount slightly higher.

Example

• Base premium: ₹10,000
• GST @ 18%: ₹1,800
• Total premium payable: ₹11,800

Though the GST increases your upfront cost, the tax amount is eligible for Section 80D deductions.

Why GST on Medical Insurance Matters for Policyholders  
 

Higher Awareness of Premium Breakdown

Understanding GST helps policyholders know how much they are paying as tax versus insurance coverage.

Impact on Budget Planning

An 18% GST can noticeably change the insurance cost, especially for senior citizens.

Tax Benefits Under Section 80D

Even with GST added, the entire premium (including GST) qualifies for tax deductions.

GST on Medical Insurance for Senior Citizens

Senior citizens often pay higher premiums due to increased health risks. With GST @ 18%, the tax amount becomes significant.  

Example

• Base premium for senior citizen: ₹25,000
• GST @ 18% = ₹4,500
• Total = ₹29,500

Tax Benefits Despite GST (Section 80D)

Even though GST increases the premium, individuals can claim tax deductions on the entire amount, including GST:  

Eligible Deductions

• Individuals below 60: Up to ₹25,000
• Senior citizens: Up to ₹50,000
• Parents (senior citizens): Additional ₹50,000

Thus, the GST portion indirectly gets compensated through tax savings.

GST on Medical Insurance for Different Types of Policies  
 

1. Individual Health Insurance

GST @ 18% on the annual premium.

2. Family Floater Policies

GST applied to the total family premium.

3. Senior Citizen Health Insurance

Higher premium → higher GST amount.

4. Top-Up or Super Top-Up Plans

GST applies at the same 18%.

5. Corporate/Group Policies

GST is applicable if employees pay the premium.  
 

Why is GST on Medical Insurance 18%?

The government categorizes insurance services under the financial services sector, attracting an 18% GST bracket. This rate remains constant across most insurance categories, including:  

• Health insurance

• Life insurance

• Motor insurance     

Is GST on Medical Insurance Expected to Change?

As of 2025, there has been no reduction in GST despite demands from the insurance industry for lowering the rate to make healthcare more affordable.

If the government revises the rate in future budgets, it could make medical insurance cheaper.

Conclusion: What You Should Know About GST on Medical Insurance

• GST on medical insurance is 18%, applicable to all health insurance premiums.
• It increases the overall premium cost, especially for senior citizens.
• The entire premium, including GST, remains eligible for Section 80D tax deductions.
• Understanding GST helps you make smarter financial and insurance decisions.

If you're planning to buy a policy, consider the GST impact and the tax benefits together for accurate budgeting.