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Today, health problems and medical costs are getting more expensive, but with the help of health insurance, you can protect your health and save money. But many people don’t buy it because the premiums (costs) are too high. So if you are facing the same problem, here is some good news!
From 22nd September 2025, health insurance is now getting 18% affordable. This is because the government has decided to remove the 18% health insurance GST rate on premiums. This change will make it easier for people to buy or renew their insurance plans.
In this blog, let’s find out about the health insurance GST rate, its benefits, and more.
What is the New GST Exemption on Health Insurance?
The GST Council has announced some good news for people who buy health insurance. After a meeting, the Union Finance Minister Nirmala Sitharaman shared that the 18% tax (GST) on health insurance will be completely removed.
Now, you only have to pay the original amount of your health insurance, without any tax, from September 22, 2025. This change applies to all types of health insurance, including family plans and plans for senior citizens. Thai will make it easier and affordable to get good health insurance.
How Does the GST Change Affect Health Insurance Costs?
The GST change will make health insurance cheaper. Let’s understand this with an example:
Right now, when you buy or renew health insurance, you have to pay an extra 18% tax on the premiums. For example, if your yearly premium is Rs. 30,000, you pay an extra Rs. 5,400 as tax, which makes it around Rs. 35,400.
After the change, you will only pay Rs. 30,000 for the premium, saving about 18%. This will make insurance more affordable, especially for people who do not have a lot of money.
Benefits of the GST Exemption on Health Insurance Premiums
Here are many benefits of removing the GST on health insurance premiums. Some of them are:
1 Health Insurance Saving More Money:
With the new GST exemption, you can now save 18% on your health insurance premiums. This means you will pay less each year, which makes it easier to afford the coverage you need. You can now spend that saved money on other important things.
2 Health Insurance is Now Easier to Get:
Lower Premiums mean that health insurance is no longer too expensive for many people. More people will be able to buy a policy, including those who could not afford it before. This will help more families stay protected against medical costs.
3 It Encourages First-Time Buyers:
The new lower prices may encourage people who have never bought health insurance to start. This is important because having health insurance helps protect you from big medical bills. More first-time buyers will help create a healthier and more protected population.
4 It gives you Better Coverage Within your budget:
Now that premiums are cheaper, you can choose a health plan that offers more coverage, which means you will be protected in case of serious illness or accidents. With this, you can live your life peacefully knowing that you have financial help when you need it most.
5 It Supports “Health Insurance for All”:
This change helps the government’s goal of providing health insurance to everyone in the country by 2047. By making insurance affordable, more people will be able to afford it, helping to reach this important goal.
6 Helps More People, Especially in Rural Areas:
The lower cost will make it easier for insurance companies to offer plans in remote and rural areas. This will help people who live far away from cities and might not have access to healthcare. More people in villages will now be able to get the coverage they need for health protection.
How does the Health Insurance GST Rate Change Affect Insurance Companies?
The GST change can help insurance companies by reducing the tax they pay on premiums, which could lead to more people buying insurance. But it also brings some challenges for them. Let’s see how:
1 Higher Cost Due to Lost Tax Credit:
Insurance companies would not be able to get back the GST they pay on things like commissions, marketing, and technology. This means that they will face higher costs, which may reduce their profits.
2 Possibility of Higher Premiums:
To cover the extra costs, insurance companies may raise their premiums. However, due to market competition, insurance companies may choose to share a large part of their savings with customers. It helps in keeping the premium cost low.
3 Need to update systems and prices:
Insurance companies will need to change their systems to follow the new rules. This will take time and effort, which could lead to temporary delays or changes in pricing.
What You Should Do Next?
Since GST on insurance will be removed starting 22nd September 2025, here’s how you can benefit:
1Check Your Current Policies:
Look at the renewal dates for your health and life insurance. If your policy is due for renewal on or after 22nd September, you’ll save money because of the GST reduction. If your renewal is before this date, don’t wait too long. Renewing on time will keep your coverage continuous.
2Plan New Purchases After 22nd September:
If you’re thinking about buying a new insurance policy, it’s a good idea to wait until after 22nd September. This way, you can save money on your premium with the GST waiver.
The new GST changes will make insurance cheaper and more affordable. It will also help you include insurance in your overall financial plan.
Conclusion
The new GST exemption brings a lot of new changes, and it health insurance affordable, even for people who live in smaller towns and villages. Having health insurance helps you get good care when you need it, which is very important for your health. While insurance companies may face some challenges at first, this change will help more people stay covered and feel safe.
FAQs
Starting from 22nd September 2025, there will be no GST (tax) on health insurance. Earlier, there was 18% GST, but now it has been completely removed. You will only pay the actual cost of your insurance premium.
Yes. Since the 18% GST has been removed, your health insurance premium will be cheaper. For example, if your premium is Rs. 30,000, you would not have to pay the extra Rs. 5,400 in tax anymore.
Yes, if possible. Buying or renewing your health insurance after 22nd September 2025 will help you save money because the GST will not be charged.
Yes. The GST removal applies to all types of health insurance plans, including individual, family, and senior citizen plans.
Since insurance will be cheaper, more people in villages and remote areas can buy it. This means better health protection for everyone, no matter where they live.
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