As of now, all individual health insurance policies in India are exempt from the 18% GST. It means that you, as a policy-buyer, will now pay only the base premium for your cover. This change directly reflects on your pocket. Therefore, you can now upgrade your plans and get more benefits in the same budget. You may even consider exploring different types of health insurance that you may have felt out of reach or unaffordable earlier. Let us understand what this means for you and how you should act on this opportunity:
What exactly has changed?
Here is what the GST exemption means for your individual health insurance premiums:
- The GST Council approved the removal of GST (from 18% to 0%) for individual health and life insurance premiums.
- The exemption applies from 22 September 2025 for new and renewal premiums of individual plans.
- Group health insurance policies remain subject to an 18% tax
Why this matters for you?
Here is how the 0% GST rate directly reduces your health insurance costs:
- Lower premium cost – Straight away, you can save about 18% on the premium component, where previously GST was added.
- Better affordability – Given rising healthcare costs, the removal of the tax burden makes coverage easier to add or upgrade.
- Choice of sum insured – With tax savings, you may put the amount you will now be saving to get a higher cover or add-ons.
- Timing advantage – If you have a policy renewal or intend to buy one soon, doing so after the date ensures you benefit.
How to use this change wisely?
The following are some practical ways to optimise your savings and upgrade your coverage.
Review your existing policy
- If your renewal date is after 22 Sept, check and ensure GST is not applied in the breakdown of your premium payment
- If you hold a long‐term multi-year plan bought before the change, verify how the insurer handles the next renewal
Compare policy options
- Use the clarity of “no GST” to compare insurers purely on base premium, cover and service
- Look at the types of health insurance: individual, family floater, senior citizen, and critical illness rider plans
Consider an upgrade
- With tax removed, you may choose a higher sum insured or add riders (e.g., maternity, outpatient cover)
- Ensure policy statements reflect the 0% GST benefit and no hidden surcharge
Check the fine print
- Confirm the exemption applies only to individual/ family plans; group plans still attract GST
- Review insurer disclosures for how they adjust premiums after losing ITC. Some may raise base rates
| Item | Before 22 Sept 2025 | After change |
| GST rate on individual plan | 18% | 0% |
| Premium for ₹15,000 base | ₹17,700 approx (incl GST) | ₹15,000 |
| Group health plan GST | 18% | 18% |
Why is this especially relevant during your coverage decision
Understand with the following points why this tax relief is the perfect time to review or buy your policy.
- Health insurance penetration remains low in India, making cost a barrier. The GST rollback removes one major cost hurdle.
- You can use a financial marketplace like Bajaj Markets for your smart financial planning and compare health insurance lenders, benefits, and premium rates before you upgrade.
- The GST exemption is now allowing you space to optimise your health insurance for maximum benefits, going beyond your general worries about affordability.
Points you should emphasise when choosing a plan
These are the key factors that determine the right and most valuable health cover:
- Sum insured vs actual need: Do your maths for hospitalisation, inflation, and region.
- Inclusions & exclusions: Check critical illness cover, OPD, pre-/post-hospitalisation.
- Claim settlement ratio & network hospitals: Service matters as much as premium.
- Renewability & age limits: Especially for senior citizen plans.
- Premium build-up: Monitor future premiums, since base rates may adjust due to ITC loss for the insurer.
Types of Health Insurance You Should Know
Health insurance is not one-size-fits-all. There are several types you can choose from, based on your needs:
- Individual Health Insurance: Covers medical expenses for a single person.
- Family Floater Plans: Cover all family members under a single sum insured.
- Critical Illness Insurance: Offers coverage for specified serious illnesses like cancer or heart disease.
- Senior Citizen Health Insurance: Designed specifically for older adults.
- Maternity Health Insurance: Covers maternity-related expenses.
- Top-up and Super Top-up Plans: Provide additional coverage once the basic limit is exhausted.
Each type serves a unique purpose. Selecting the right one depends on your age, health, and financial goals. Comparing on an aggregator like Bajaj Markets before you shift or upgrade your insurance plan is a smart decision.
Conclusion
The government has made a powerful move towards affordability by removing GST on individual health insurance premiums. You now stand to gain directly. Align your purchase or renewal of health cover accordingly. Focus on assessing types of health insurance, your actual need, and plan features.
