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Zero GST on Health Insurance: Impact and Rate Changes on Tax-free Health Plans

Roocha KanadeOct 22, 2025

GST on health insurance has been a long-standing cost component for policyholders in India. Whether it was individual, family, or senior citizen coverage, an 18% GST on health insurance premium made policies more expensive. But there’s good news, from 22nd September 2025, you can now buy GST-free health insurance policies. At ACKO, we’re already offering plans that reflect the new GST rate on health insurance, meaning your premiums are now completely tax-free. This move is set to make health insurance more affordable and accessible to everyone. In this article, we’ll break down what this health insurance GST exemption means, how it impacts your premiums, and why choosing ACKO helps you save more with 0% GST health plans.

Zero GST on Health Insurance concept illustration showing health insurance document, calculator, and coins — representing tax-free health plans, GST exemption benefits, and rate changes in India

Contents

What is GST?
GST Council’s Landmark Decision: No GST on Health Insurance
How Does 0% GST Impact Your Health Insurance Premium?
How Does Nil GST on Health Insurance Benefit You?
Tax Savings Under Section 80D
Types of GST in Health Insurance
Impact of GST Exemption on Health Insurance Policy Renewal
Why Choosing ACKO Makes Sense?
Frequently Asked Questions

What is GST?

The Goods and Services Tax (GST) is a unified indirect tax applied to most goods and services in India. Introduced to simplify India’s complex taxation structure, it replaced multiple central and state-level taxes such as service tax, excise duties, and cesses.

When GST came into effect, it also included insurance services, meaning there was a GST on mediclaim and GST on health insurance premiums. Whether you were buying a new policy or renewing an old one, an 18% health insurance GST rate applied.

GST Council’s Landmark Decision: No GST on Health Insurance

In the 56th GST Council meeting held on 3rd September 2025, the government announced a major reform for health insurance GST. Starting 22nd September 2025, all new health insurance policies in India are completely GST-free.

Earlier, every health policy premium included an 18% GST on health insurance premium, but this additional tax has now been removed. This new GST on health insurance reform is a big step towards making medical coverage simpler and more affordable.

How Does 0% GST Impact Your Health Insurance Premium?

Until now, all health insurance premiums in India carried an 18% GST component, irrespective of whether you paid annually or monthly. This meant your total payable amount was higher than your base premium.

But with the new GST rate on health insurance (0%), you now pay only the base premium, no tax added. The health insurance GST rate new structure ensures the cost you see is exactly what you pay.

Description	Before GST Exemption	After 22nd September 2025 (GST-Free)
Sum Insured	₹10,00,000	₹10,00,000
Policy Premium	₹25,000	₹25,000
GST Rate	18%	0%
GST Amount	₹4,500	₹0
Total Payable	₹29,500	₹25,000

At ACKO, every new policy issued after 22nd September automatically includes this health insurance GST exemption, allowing you to enjoy zero GST on health insurance and greater savings.

How Does Nil GST on Health Insurance Benefit You?

The removal of GST in health insurance from 18% to 0% is a huge win for consumers. It makes coverage more affordable and encourages more people, especially first-time buyers, to purchase a health plan.

This no GST on life and health insurance policy also supports India’s healthcare ecosystem by improving access to financial protection for individuals and families. Essentially, the GST on health insurance news reflects a larger government push to make healthcare and insurance inclusive.

Tax Savings Under Section 80D

Apart from enjoying 0% GST on health insurance, you can continue saving under Section 80D of the Income Tax Act. You can claim up to ₹1 lakh in deductions if you buy health insurance for yourself and your family.

You can also claim preventive health check-up expenses up to ₹5,000 annually. Note that tax rules are subject to change based on the Union Budget and government policies.

Types of GST in Health Insurance

Here’s how health insurance GST used to apply before the exemption and what changes now.

GST on Premiums: Earlier, there was 18% GST on health insurance premium in India, increasing your total payable amount. From 22nd September 2025, new and renewed policies, including those from ACKO, are GST-free health plans.
Input Tax Credit (ITC): Insurers earlier availed ITC on various business expenses to offset their GST for health insurance liabilities. This helped insurers reduce their overall GST liability, sometimes indirectly affecting premium rates. With the new 0% GST rule, this aspect becomes less relevant for new policies, but insurers like ACKO continue to optimise costs to keep premiums affordable.
GST on Services: While health insurance GST is now 0%, certain medical or elective services not covered under your policy may still attract GST.
Health Insurance Claims: Making a claim on your ACKO policy remains unaffected by GST. The claim amount you receive is not subject to any GST, ensuring you get the full benefit of your coverage.
Exemptions and Special Provisions: Government schemes and group health insurance policies may have their own conditions, but private policies like ACKO’s are covered under the new GST rate on health insurance premium.
Impact on Policyholders: The health insurance GST rate 2025 reform means you now pay only your base premium, making coverage simpler and more affordable. Health insurance continues to provide critical financial protection against high medical costs, and with ACKO, you get simple, transparent coverage without hidden charges.
Tax Deductions: Policyholders can still enjoy tax benefits under Section 80D of the Income Tax Act. You can claim deductions on premiums paid for yourself, your spouse, children, and parents, subject to certain limits and conditions.

Impact of GST Exemption on Health Insurance Policy Renewal

Before September 2025, renewals also included GST on mediclaim premium at 18%. Now, renewals post 22nd September 2025 will reflect 0% GST on health insurance, making it a true tax-free renewal. For older policies purchased before this reform, the standard health insurance GST rate applies until renewal under the new system.

At ACKO, all eligible policies, whether individual or group health insurance, now follow the health insurance new GST rate of 0%, ensuring full transparency and zero extra charges.

Why Choosing ACKO Makes Sense?

By offering zero GST on health insurance, ACKO continues to make health coverage simple, transparent, and cost-effective. Whether you’re buying a new policy or renewing an existing one, you pay exactly what you see, no hidden costs, no tax surprises. This GST on health insurance news marks a turning point for India’s insurance industry, helping more people access quality healthcare without financial stress.

Frequently Asked Questions

Below are some of the frequently asked questions on Zero GST on Health Insurance

Is health insurance GST-free now?

Yes. From 22nd September 2025, all new individual health insurance policies, including family floater plans and senior citizen health insurance, are completely GST-free. This means you pay only the base premium without any additional tax. ACKO health insurance GST-free policies automatically reflect this benefit.

When does GST on health insurance become 0%?

The GST on health insurance was reduced to 0% starting 22nd September 2025, following the 56th GST Council announcement. Any new health insurance policy issued online or offline after this date will not include GST in the premium.

How much do I save with GST-free health insurance?

Savings depend on your premium amount. For example, a health insurance premium of ₹25,000 earlier attracted 18% GST (₹4,500), making the total payable ₹29,500. With GST-free health insurance, you pay only ₹25,000, saving ₹4,500 instantly.

Are ACKO health insurance plans GST exempt?

Yes. All new ACKO health insurance policies issued after 22nd September 2025 are GST-free, making your premiums more affordable while giving you full coverage.

Does GST apply to health insurance renewals?

For policies purchased before 22nd September 2025, renewals may still attract the standard GST until the policy is replaced with a new GST-free plan. For new policies or renewals issued after 22nd September 2025, the GST does not apply, so you pay only the base premium.