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Goods and Services Tax (GST) is a unified indirect tax system in India that replaced multiple previous taxes. It is structured into four main slabs: 5%, 12%, 18%, and 28%, depending on the nature of goods and services. Health insurance falls under the 18% GST slab and is classified under HSN code 997133, similar to other insurance products. Before GST, health insurance was taxed at 15% under the service tax regime.
This article explores the GST rate and HSN code for health insurance, compares pre- and post-GST tax rates, and offers additional insights
What is GST on Health Insurance?
The GST rate on health insurance premiums in India is 18%, applicable to individual, family floater, and critical illness policies. However, government-run schemes for economically weaker sections, like the Universal Health Insurance Scheme and the Niramaya Health Insurance Scheme, are exempt from GST. These exemptions help reduce the financial burden on vulnerable groups. Understanding these GST provisions enables policyholders to make informed decisions about their health coverage
What is the Health Insurance HSN Code under GST?
| Description of Service | HSN Code | GST Rate |
|---|---|---|
| Accident and health insurance services of all kinds | 997133 | 18% |
| Universal Health Insurance Scheme | 9971 or 9991 | Nil |
| Niramaya Health Insurance Scheme (under the National Trust Act) | 9971 or 9991 | Nil |
GST for Health Insurance: Before vs After GST
Before GST, health insurance premiums attracted a 15% Service Tax (14% basic service tax + 0.5% Swachh Bharat Cess + 0.5% Krishi Kalyan Cess). This led to a relatively lower tax burden for policyholders.
Post-GST implementation, the rate increased to 18%, replacing the earlier service tax regime. This hike has raised premiums and impacted affordability. Despite demands from the insurance industry to reduce the GST rate to 5%, the rate remains at 18%.
Policies bought before GST are not retrospectively affected; however, renewals are taxed under the new GST regime, reflecting this shift and its effect on costs
How to Calculate GST on Health Insurance?
GST is applied at 18% on the base premium. For example:
Base premium: ₹20,000
GST (18% of ₹20,000): ₹3,600
Total premium payable: ₹23,600
The no-claim bonus amount is excluded from GST calculation, meaning GST is charged only on the premium after applying any no-claim discount, reducing the overall tax burden
Can I Claim GST on Health Insurance?
Under Section 17(5)(b) of the CGST Act, businesses cannot claim Input Tax Credit (ITC) on GST paid for health insurance premiums, except when health insurance is legally mandated for employees under labor laws.
For individuals, GST paid on health insurance premiums qualifies for a tax deduction under Section 80D of the Income Tax Act, allowing some tax savings despite the GST cost
55th GST Council Meeting on Health Insurance GST
At the 55th GST Council meeting on December 21, 2024, a decision to reduce GST rates on health insurance premiums was deferred, referring the matter to a Group of Ministers (GoM) for further study. The GoM proposed:
GST exemption on health insurance premiums for individuals (excluding senior citizens) with coverage up to ₹5 lakh.
Exempting GST on premiums for term life insurance and senior citizens’ health insurance policies.
Reducing GST on medical insurance premiums for non-senior citizens from 18% to 5%.
The Council will review these recommendations further before any changes are finalized
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May 31, 2025
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