Zero GST, Full Benefits: Why It is the Right Time to Buy a GST-free Individual Health Plan?

A historic tax reform just made health insurance cheaper than ever before. The Union Finance Ministry of India launched the new GST regime on 22nd September, 2025. This new GST regime, also known as GST 2.0, made individual health insurance completely GST-free for the people of India. This reduction in tax from 18% to 0% will reduce the insurance premiums, making individual health plans more affordable.

The main aim of this reform was to make healthcare more accessible for the people of India. Read more to know about the impacts of the GST-free individual health plan and what makes today the right time to invest in an Individual health insurance plan.

Impact of GST 2.0 on Individual Health Plans

A significant change will come into effect on September 22, 2025, following the 56th GST Council meeting. Read more to find out the direct impact of the reduction of 18% GST to 0% GST on individual health plans.

Savings on Individual Health Plans

The most significant effect of the GST-free individual health plan is the reduction in prices. Previously, the 18% GST kept a lot of people from securing a much-needed health insurance plan.

Suppose you purchase a My Health Care plan from Bajaj General Insurance for ₹9,500 with a ₹10 lakh cover. The same insurance policy would come for ₹11,200 base premium if you had bought this before 22nd September, 2025.

Opportunity to Get Better Coverage

You can fulfil the cutbacks on your insurance coverage or sum insured by utilising your tax savings to purchase better insurance coverage. Greater affordability will reduce financial stress. It will also encourage people to choose higher insurance coverage, protecting them from large medical expenses. This will help them to secure themselves from massive medical expenses in a country like India.

Promotes First-time Insurance Buyers

Experts believe that reduced premium prices for health insurance will encourage first-time buyers from tier 2 or tier 3 cities to purchase coverage for themselves. This will help people secure themselves from critical financial situations due to an emergency health crisis. 

Reduce Pressure on Public Healthcare Organisations

Approximately 70% of Indians do not have a health Insurance plan, and very few people can afford to spend their lifetime savings or take a loan to buy medical care. This puts a lot of pressure on the public healthcare system. Increased market penetration for health insurance will lead more people to choose private hospitals.

Opportunity to Customise Plans

The exemption of GST on health insurance policies allows people to buy GST-free individual health plans with additional coverages. You can use the extra tax savings money to customise your plan with add-ons like Air Ambulance Cover or Respect Rider Cover.

If you were stalling your individual health insurance purchase, now is the time to buy your My Health Care Plan from Bajaj General Insurance Company. Bajaj offers additional discounts as per their specific policy terms.

Implementation of GST 2.0 on Individual Health Plans

GST was first introduced in the Indian Taxation System in July 2017. Since then, GST on individual health insurance premiums has been 18%. On 22nd September, 2025, following the 56th GST Council meeting, the new GST rates were changed to 0%, allowing us to enjoy a GST-free individual health plan.

Let’s find out exactly what you gain from these reforms with the help of an example.

Suppose you buy an Individual health insurance plan for an annual premium of ₹15,000. Now, let’s compare what the scenario would be if you had purchased this plan before and after the introduction of GST 2.0.

This means you now save ₹ 2,700 (17,700 - 15,000) on premiums for your GST-free individual health plan.

Benefits of Buying a GST-free Individual Health Plan Now

India sees a constant inflation of 10 to 13% in healthcare expenses every year. This rising medical cost is a clear call for you to buy health insurance. Here is why now is the right time to buy an individual health plan.

Lower Premiums

The 18% GST on individual health plans increased your premiums by approximately ₹1500 to ₹3000 from your net price. Now, with the introduction of GST-free individual health plans, the premiums will be lower and affordable.

Better Coverage

You can now buy a personal health insurance cover with a higher “sum-assured” value at the same price. Moreover, companies like Bajaj General Insurance offer features such as unlimited reinstatement of sum insured. These features offer additional financial safety.

Safe From Inflation

As more and more people buy health insurance to take advantage of GST-free individual health plans, the base premium price may rise. Moreover, healthcare expenses are set to increase by 13% in 2025-26, which will directly impact premium prices. Buying an individual health plan now will save you from the upcoming inflation.

Tax Deduction Under 80D

You can make additional savings on income tax with the help of deductions under 80D if you buy a health insurance plan now. This means you will save on the tax-free individual health plan and benefit from income tax savings under Section 80D.

Affordable Prices

The drop in insurance prices allows you to buy the best individual health policy at affordable prices. You can now remain stress-free about your health-related expenses with GST-free medical insurance.

If you have been putting off your individual health insurance purchase, now is the best time to act. With healthcare inflation rising each year, locking in a GST-free premium today can help you secure your health and finances at a much lower cost.

Take advantage of the zero GST benefit and explore comprehensive My Health Care plans from Bajaj General Insurance. Protect your future while saving more today.

The Bottom Line

The main aim of the changes in the new GST regime was to reduce taxes on essential items and cover them up by increasing taxes on luxurious goods. Health insurance comes under the essentials. The GST-free individual health plan and the 0% GST on other health insurance premiums were steps towards universal health coverage. This will help more Indians to safeguard their finances and take care of their health.

Frequently Asked Questions

What is the current rate of GST on individual health insurance?

Currently, the rate of GST on individual health insurance is 0%. This came into effect from 22nd September 2025, after the 56th GST Council meeting, when the new GST regime was launched. Before this, since GST was introduced in India, people were paying 18% GST on individual health plans.

How does the reduction of tax from 18% to 0% affect individual health insurance?

The exemption of tax on individual health plans will decrease the premium prices and make insurance more affordable. For example, an individual health insurance plan that costs ₹15000 after GST 2.0 would cost you ₹17,700 before 22nd September, when the new GST regime was not launched.

Can Policyholders save on income tax under section 80D after GST 2.0?

Yes, even after the introduction of the new GST regime on 22nd September, 2025, you can save an additional amount on income tax under Section 80D if you purchase an individual health plan.

Does the reduction in premium due to 0% GST on individual health plans affect its coverage?

No, the reduction in premiums is specifically due to the decrease in taxes (from 18% to 0%). This will not affect your individual health insurance coverage.

What effect does an individual health plan with 0% GST have on health insurers?

Before the GST-free individual health plan, insurers could claim Input Tax Credit (ITC) on GST paid for various expenses, such as commissions, office rent, IT systems, etc. This helped to reduce the insurer’s tax liabilities. Insurers often use this tax saving to stabilise premium rates. This can cause the insurance premium to rise. However, the benefits of tax exemption will still outweigh the price hike due to ITC.

Do I get the 0% tax benefit on an individual health plan at the time of renewal?

Yes, you will benefit from a 0% tax on individual health plans at the time of renewals and purchases, provided you are buying after 22nd September, 2025.

Can I upgrade my health plan using the GST savings?

Absolutely. The savings from zero GST can be used to increase your coverage amount or add extra features like critical illness or ambulance cover.

How does the zero GST benefit impact long-term health planning?

Lower premiums make it easier to sustain long-term coverage, ensuring uninterrupted protection and financial stability against rising healthcare costs and medical inflation.

*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.