What is GST?

GST stands for “Goods and Services Tax” which was levied by the Indian government in July 2017. It is an indirect tax that a consumer has to pay for various goods and services such as electronic items, petroleum products, electricity, etc. GST on health insurance premium also increased by 3%. It is mainly of two types:

  • CGST: This is the charge that goes to the central government for every transaction. This is also charged for interstate transportation of goods.
  • SGST: This is charged by the state government for the intra-state movement of goods under GST.

Effects of GST on Health Insurance:

Before the implementation of GST, the payable tax on health insurance policy was 15%. But when it was implemented in 2017, the tax rose by 3%, bringing the total payable tax to 18%. Care Health Insurance, formerly known as Religare offers various health insurance policies at affordable prices. Let’s understand it with an example:

Suppose a person buys a healthcare policy with a premium of Rs.12,000 per year. The total amount payable:

  • Before GST: 15% of Rs.12,000= Rs.1800 + premium amount.
  • After GST: 18% of Rs.12,000= Rs.2,160 + premium amount.

Advantages of GST Implementation in the Health Insurance Policy:

Although one must think from the above example that the prices of health insurance increased, which is true, but there is also a positive impact of GST. As the competition is increasing, the insurance companies are worried that they might lose customers, if the premium for the policies is too high. In India, not everyone can afford a health insurance policy, and with the increase in the prices, they will be less likely to buy an insurance policy. This led to the insurance companies introducing more affordable plans which are ultimately lower than the previous premium that an individual had to pay before.

Disadvantages of GST Implementation in the Health Insurance Policy:

  • According to the new tax system, all the new and existing policyholders have to pay an increased amount for their policies.
  • The input tax credit facility will no longer be available for the individual policyholders. All the tax advantages that a group policyholder availed has also gone with the new tax law.
  • Before the GST, the individual policyholders had to pay a 15% tax. With the increment of 3%, the policyholders have to pay 18% tax on the premium.

Health Insurance Policies that are Exempted from GST:

All the insurance policies that are provided under the government schemes are exempted from GST. Some of them are:

  1. Pradhan Mantri Jan Dhan Yojna
  2. Pradhan Mantri Jeevan Jyoti Bima Yojna
  3. Aam Aadmi Bima Yojna (AABY)
  4. Janashree Bima Yojna (JBY), etc.

Life insurance provided to the Army, Navy, and Airforce which is provided by the central government is also exempted.


A person buying an insurance policy must always keep the need and requirement in his mind. Ultimately, your need and financial conditions will be the deciding factor.



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