GST on Health Insurance (2025 Guide): Rate, Example Calculations, ITC Rules, Old vs New Tax Regime, and Smart Ways to Save

GST on Health Insurance

Health insurance premium par GST kitna lagta hai? Kya GST portion pe 80D deduction milti hai? Employers ke liye ITC rules kya kehte hain? Is detailed guide me hum GST @ 18% (as of 2025), invoice me CGST/SGST vs IGST split, real examples, old vs new income tax regime implications, employer ITC clause (Section 17(5)), multi‑year policy GST, cancellations/refunds—sab kuch simple Hindi‑English (Hinglish) me explain kar rahe hain.

Updated: Sep 08, 2025 • Helpful hub: InsuranceHero

TL;DR — Quick Answers

• GST rate: Health insurance premium par 18% GST lagta hai (as of FY 2024–25 / 2025 updates).
• Invoice split: Same state me CGST + SGST (9% + 9%); inter‑state me IGST 18%. Total same rehta hai.
• Individuals: 80D deduction (old regime) total premium paid including GST par claim kiya ja sakta hai; new regime me 80D available nahi hota.
• Employers/Business ITC: Section 17(5) ke under health insurance ka ITC blocked hai, except jab law ke tahat employees ko dena compulsory ho (e.g., specific statutory requirement). Tab ITC allowed ho sakta hai (facts/law dependent).
• Multi‑year policy: GST upfront poore premium par lagta hai; cancellation/endorsement par pro‑rata GST adjustment milta hai.
• Claims: Insurance claim receipts par GST nahi lagta—only premium par lagta hai.

On this page

• 1) GST rate on health insurance (and why)
• 2) How GST appears on your invoice (CGST/SGST vs IGST)
• 3) Easy calculations: examples for individuals & families
• 4) 80D deduction: old vs new tax regime
• 5) Employers/Business: ITC rules under Section 17(5)
• 6) Practical nuances (add‑ons, riders, top‑ups, multi‑year)
• 7) Cancellations/endorsements & GST refund/adjustments
• 8) Smart ways to reduce your net cost (legally)
• 9) FAQs

1) GST rate on health insurance (and why it’s 18%)

Health insurance ek financial service hai aur GST law me “insurance services” category ke under aata hai. Is category par currently 18% GST applicable hai. Ye rate service nature ke hisaab se hai, isliye life endowment jaise products me alag computation hoti (mixed supply/valuation rules)—but pure health insurance ke liye broad rule simple hai: base premium × 18%.

Note: Government schemes (e.g., certain publicly funded health programs) alag treatment le sakte. Retail mediclaim policies jo general insurers issue karte hain—un par 18% GST lagta hai.

2) Invoice me GST kaise dikhta hai (CGST/SGST vs IGST)

• Same State (Insurer branch state = customer’s state): Split CGST 9% + SGST 9% shown. Total remains 18%.
• Inter‑State supply: IGST 18% aaega. Total still 18% hi rehta.
• Invoice par GSTIN (insurer), place of supply, HSN/SAC (Insurance services ke liye SAC 9971 series) mention hota.

Tip: NCB discount or corporate discount base premium par apply hota; GST hamesha net premium (after discount) par compute hota hai—pehle discount, baad me GST.

3) Easy calculations: exactly how much GST you pay

Formula bahut simple hai:

Total Payable = Base Premium (after discounts) + 18% GST

Example A — Individual policy

• Base premium: ₹12,000
• GST @ 18%: ₹2,160
• Total payable: ₹14,160

Example B — Family floater

• Base premium: ₹24,000
• Discount (NCB/online): ₹2,000 → Net premium = ₹22,000
• GST @ 18% on ₹22,000 = ₹3,960
• Total payable: ₹25,960

Example C — Senior citizen + top‑up

• Base (base policy): ₹28,000
• Base (super top‑up): ₹7,000
• Total base: ₹35,000 → GST @ 18% = ₹6,300
• Total payable: ₹41,300

Scenario	Base Premium (₹)	GST 18% (₹)	Total (₹)
Individual	12,000	2,160	14,160
Floater (after ₹2,000 discount)	22,000	3,960	25,960
Senior + Super top‑up	35,000	6,300	41,300

4) 80D deduction: old vs new income tax regime (and GST ka role)

Old tax regime me health insurance premium par Section 80D deduction milti hai—aur yeh generally GST included total premium par apply hoti hai (kyunki law me “amount paid to effect/keep in force an insurance” bola gaya hai). Limits:

• Self + family (no senior): up to ₹25,000
• Parents (no senior): additional ₹25,000
• Senior citizens (60+): respective limit ₹50,000
• Preventive health check‑up: included within the above limits

New tax regime (default from FY 2023–24 onwards): Section 80D generally not available. Iska matlab—agar aap new regime choose karte ho, premium par koi 80D benefit nahi milega, chahe GST included ho.

Net cost calculator idea: Old regime me 80D se tax bachta hai, to practical outflow kum hota. For example, ₹25,960 total par agar aap 20% slab (old regime) me ho aur 80D limit available hai, to ~₹5,192 tak tax saving ho sakti (subject to limits/other deductions), net outflow ~₹20,768. New regime me yeh saving nahi milegi.

Reminder: Old vs new regime choice overall computation par depend karta—sirf 80D ke liye regime switch mat karein. CA se full tax comparison karwa lein.

GST on Health Insurance (2025 Guide): Rate, Example Calculations, ITC Rules, Old vs New Tax Regime, and Smart Ways to Save

5) Employers/Business: ITC rules (Section 17(5)) — kab allowed, kab blocked

Section 17(5)(b) ke hisaab se “life insurance and health insurance” par ITC blocked hai—except jab employer ko law ke tahat employees ko ye facilities dena mandatory ho (e.g., certain State/Factory rules), ya outward taxable supply bana rahe ho (rare). Iska practical matlab:

• Voluntary Group Health for employees: ITC generally blocked.
• Statutorily mandated coverage (document evidence): ITC consider kiya ja sakta (facts & law dependent).
• Family coverage/add‑ons (spouse/kids) often voluntary—ITC blocked.
• Accounting: P&L me expense book karo; ITC claim only if meets “obligatory” carve‑out + proper documentation.

Note: AAR/Advance Rulings me mixed views aate. Safest approach—written legal opinion + HR policy references + statutory citations maintain karo. Regular GST audit/assessment me yeh point check hota.

6) Practical nuances: riders, top‑ups, multi‑year, portability, and medical tests

• Add‑ons/Riders/OPD: Premium ka part hote hain—same 18% GST.
• Top‑up/Super top‑up: Alag policy hoti; premium par 18% GST.
• Multi‑year policy (2–3 yrs): Discounted base par upfront GST. EMI karein to insurer policy terms ke hisaab se invoice split kar sakta—check schedule.
• Portability (renewal pe switch): New insurer new invoice raise karega—again 18% GST; continuity benefits medical terms pe apply hote (not GST).
• Pre‑policy medicals: Kabhi‑kabhi insurer arrange karta to cost bundled hota (then 18% along with premium). Agar aap khud karwa rahe ho (separate bill from hospital), wo healthcare services ho sakti (usually exempt)—insurer ke invoice se alag treat hota.

7) Cancellations/endorsements: pro‑rata refund & GST adjustments

Policy cancel/endorse karte waqt insurer pro‑rata base premium return karta (T&C apply). Saath me GST reversal/adjustment bhi invoice me reflect hota. Agar claim ho chuka, cancellation/refund rules alag ho sakte (read wording).

• Address/nominee change jaise non‑monetary endorsements—premium impact nil (no GST change).
• Sum insured change—premium difference par GST adjust hota.

8) Smart ways to reduce your net cost (legally, without hurting coverage)

• Annual payment > monthly (processing/finance charges bach sakte).
• Top‑up + Super top‑up: Base SI reasonable rakho, large risks ko top‑up se cover—premium per lakh lower.
• Family floater (young family): Same SI share karke cost optimize.
• Network strength: Cashless network strong rahe to OOP shocks kam; wrong room rent caps avoid karo.
• Old regime select (if overall beneficial): 80D deduction se net outflow kum ho sakta (overall tax planning ke saath decide karo).
• Multi‑year discount: 2–3 year policy par base discount milta—GST reduced base par lagega → total saving.

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• InsuranceHero Home — latest guides & tools

9) FAQs — GST on Health Insurance

Q1. Health insurance par abhi GST kitna hai?
As of 2025, 18%. Same state me CGST 9% + SGST 9%; inter‑state me IGST 18%. Total burden same rehta hai.

Q2. Kya 80D deduction me GST portion include hota hai?
Old regime me haan—generally “amount paid” including GST par deduction claim hoti. New regime me 80D available nahi.

Q3. Kya claim settlement par GST lagta hai?
Nahi. GST premium par lagta hai, claim payout ek indemnity hai—us par GST nahi lagta.

Q4. Employers ko ITC milta hai kya?
Generally blocked u/s 17(5) for health insurance, except jab employees ko dena law ke tahat compulsory ho. Tab carve‑out ke under ITC consider ho sakta (facts/citations pe depend).

Q5. Multi‑year policy pe GST kaise lagta?
Upfront total base premium par 18%. Cancellation/endorsement par pro‑rata GST adjustment milta hai.

Q6. Portability me GST ka effect?
New insurer fresh invoice raise karta—phir se 18% GST; medical continuity benefits pe effect nahi.

Q7. Add‑ons/OPD riders par bhi 18%?
Haan—premium ka part hote hain, isliye same rate apply hota (unless insurer ne specifically alag valuation di ho per law).

Q8. Kya GST rate future me kam ho sakta?
Policy decision GST Council leti hai. Kabhi‑kabhi rate rationalisation discuss hota. Latest updates ke liye yeh tracker dekhein: GST Cut 2025 guide.

Bottom line: Health insurance premium par 18% GST standard hai. Individuals old regime me 80D use karke net outflow kam kar sakte; new regime me 80D nahi milta. Employers ke liye ITC normally blocked hai except statutory obligation carve‑out. Sahi sum insured + right plan design + smart tax planning = real savings. Fresh updates/trackers ke liye InsuranceHero par nazar banaye rakhein.

Disclaimer: GST rates/rules and income‑tax provisions time‑to‑time change hote rehte. Ye guide informational hai—final decisions se pehle apne insurer invoice, GST law updates, aur CA/Tax professional ki advice consider karein.