How GST for Mediclaim Policy Impacts Premiums and Tax Benefits?

For years, mediclaim has carried an invisible weight of taxation with it. 18% GST was quietly inflating your premium every year. However, 2025 brings a game-changing reform: the GST for mediclaim policy is now reduced, offering significant tax relief and making health insurance more affordable. It is an indication that the nation is finally treating insurance as a necessity, not a luxury.

In this blog, we will uncover how this change reshapes your mediclaim premium, tax savings, and the overall approach to financial protection.

Understanding GST for Mediclaim Policy

Before GST was implemented in India in 2017, mediclaim was subject to a service tax of 15%. After the implementation of GST in 2017, the taxation of mediclaim was placed under the 18% tax slab. Now, after the 56th GST Council meeting, the amendment to the GST slab rates, effective from 22nd September 2025, has brought medical claims under the 0% category.

The current GST percentage on mediclaim premiums is as follows:

Direct Impact of GST 2.0 on Mediclaim Premiums

The decrease in the mediclaim premiums is the most direct impact of GST 2.0. This decrease is due to the exemption of GST.

1. This means that if Raj bought a Global Health Care plan from Bajaj General Insurance Company before September 22, 2025, the base premium of ₹25,000 would have 18% GST of ₹4,500 added to it. This would make the total payable premium ₹29,500.

2. However, if Raj buys the same plan after September 22, 2025, then the ₹25,000 base premium will be GST-free. So, his total payable premium would be ₹25,000.

This represents an instant saving of ₹4,500 from GST on medical insurance policy.

So, if you are planning to buy a mediclaim policy, now is the best time to do so. Get a quote for your mediclaim policy at 0% GST instantly from Bajaj General Insurance Company.

Other Premium-related Effects

1. Encourage Wider Coverage: Lower premiums will help more people to upgrade their sum insured or add covers, such as Respect Rider (Senior Care) or Hospital Cash Allowance.

2. Increase Affordability: As the GST for mediclaim policy has become 0%, it will make mediclaim plans accessible to first-time buyers, particularly in Tier-2 and Tier-3 cities in India.

3. Boost Insurance Penetration: With lower mediclaim cost increase in mediclaim insurance adoption in India will also rise across middle-income households.

Moreover, while insurance companies will not be able to claim Input Tax Credit (ITC) on their mediclaim-related operational expenses, any impact on premium costs is expected to be minimal, keeping your health coverage accessible and affordable.

Impact of GST 2.0 on Tax Benefits against Mediclaim Policies

If you are an individual, you can claim up to ₹1,00,000 tax deductions in mediclaim. Even after the new GST for mediclaim policy has been implemented, there have been no reforms for deductions that you can take advantage of. You can claim a tax deduction as per Section 80D of the Income Tax Act.

Below are a few categories where these deductions can be claimed:

Deductions Available for Individuals

Individuals can claim up to ₹25,000 as a deduction for the premium paid towards medical insurance for themselves, their spouse, and their dependent children. This amount can also include payments for preventive health check-ups.

Deductions for Senior Citizens

For senior citizens (aged 60 years or above), the deduction limit increases to ₹50,000. This applies whether the senior citizen is the policyholder or covered under a family plan.

Deductions for Parents’ Health Insurance

A separate deduction of up to ₹25,000 is available for premiums paid on parents’ health insurance. If either parent is a senior citizen, this limit again rises to ₹50,000.

Please note that to qualify for the Section 80D deduction, the mediclaim premiums must be paid by any mode other than cash, such as cheque, debit card, online banking, or UPI. In this rule, the only exception allowed is for preventive health check-up expenses, where a tax deduction on cash payment is accepted.

Broader Economic and Consumer Impact

As the mediclaim GST rate becomes 0% for individuals and families, the health and medical insurance sector is expected to see a higher penetration rate. With this, the economy of the country will also be positively impacted.

More people are bound to purchase a mediclaim policy as the costs of premiums decrease. This change, brought about by the Indian government, will also help in fulfilling India’s goal of ‘Insurance for All by 2047’.

Bottom Line

The GST reform for mediclaim policy, effective September 22, 2025, is a win for policyholders. This is because the premiums for individual and family plans are now GST-free, which has made health insurance more affordable than ever.

At the same time, your tax benefits remain intact, allowing you to continue claiming deductions under Section 80D. This change not only puts money back in your pocket but also encourages broader insurance coverage, making quality healthcare more accessible to households across the country.

Frequently Asked Questions

Q1. From when does the 0% GST on mediclaim policy apply?

0% GST on medical insurance policy applies from 22nd September 2025.

Q2. How much can I save on my medical insurance premium now?

You can save the full 18% GST that you used to pay previously on your mediclaim premiums. For example, now you can save ₹4,500 if your base mediclaim premium is ₹25,000.

Q3. Does the GST for the mediclaim policy removal affect my tax deductions?

No, you can still claim deductions under Section 80D as before.

Q4. Can I claim a deduction for preventive health check-ups?

Yes, you can claim up to ₹5,000 per year for preventive health check-ups within the section 80D limit.

Q5. Can HUFs claim deductions for mediclaim under Section 80D?

Yes, HUFs can claim up to ₹25,000 for members and ₹50,000 if they are covering any senior citizens.

Q6. Will my health insurance/ mediclaim policy coverage or terms change because of the GST reform?

No, the exemption of GST for mediclaim policy is a tax rate change. It does not alter the terms, conditions, or benefits of your health insurance policy.

Q7. When is the best time to purchase a new mediclaim policy to benefit from the GST exemption?

You should purchase a new policy on or after September 22, 2025. Before buying a mediclaim policy, make sure that the insurer has already updated all the prices according to the new GST rate.

Q8. Will existing mediclaim policyholders also get the GST exemption?

Yes. If your renewal date is on or after 22nd September 2025, the new 0% GST rate will automatically apply to your premium amount.

Q9. Do senior citizen mediclaim policies also get the GST exemption?

Yes, senior citizen mediclaim plans are fully exempt from GST under the new reform, which helps reduce premium costs and makes health coverage more affordable.

*Standard T&C Apply

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

Claims are subject to terms and conditions set forth under the health insurance policy.