GST on Mediclaim Premium: 2026 Rates, Waivers and Savings Explained

Suppose your base premium is ₹20,000, and you need to pay the final mediclaim premium around ₹23,600 after adding 18% GST. This hefty mediclaim premium with a substantial ₹3,600 is bringing a significant burden to middle-class households. However, with the recent GST reduction to 0%, your premium has reduced, and you can now breathe a sigh of relief.

In this blog, we will explore the GST on mediclaim premiums, including rates, waivers, and how the new GST rates can help you save the maximum.

GST Rates on Mediclaim Premiums: Before vs Recent Updates

The GST on mediclaim premiums was indeed 18% until recently. A higher GST applied on mediclaim was challenging senior citizens and middle-class families. The previous mediclaim tax GST resulted in a low mediclaim penetration rate in India, approximately 4% of GDP.

However, following the 56th GST Council meeting, a significant reform was declared. As of September 22, 2025, the tax applied to health insurance policies is eliminated. Here are the recent GST change rates.

What are the Types of GST Applicable to Mediclaim Policies? 

CGST (Central GST) on Mediclaim Polices

Central GST is levied on intrastate sales of health insurance policies.

1. The Centre imposes Central GST on mediclaim policies sold within a state.

2. This tax component is paired with SGST or UTGST and amounts to 9% of the premium.

SGST (State GST) and UTGST (Union Territory GST)

State or Union Territory GST applies to health insurance policies sold within any union or state of India.

1. This tax is levied alongside Central GST (CGST) and is collected by the respective state.

2. The tax rate on mediclaim plans was 9%.

IGST (Integrated GST) on Medical Insurance:

Integrated GST applied when the policyholder and insurer were located in different states.

1. The Centre collects this tax, which combines the rates of CGST and SGST/UTGST.

2. 18% tax is used to distribute between the Centre and the consuming state.

However, considering the recent GST 2.0 implementation, the tax rate has been reduced to 0% on individual health insurance policies. This aims to increase penetration in the country.

How Does the GST Reform Affect Your Wallet? 

With the application of 0% GST on mediclaim cover, you can enjoy greater savings. Your savings are becoming proportionate to the life insurance premiums. This reform of GST on mediclaim premiums mainly saves money for retirees and senior persons, who previously hesitated to purchase a medical insurance plan due to higher premiums.

Check below to understand how the reduction is directly benefiting your mediclaim premium with GST and wallet.

The above table illustrates the cost-saving impact of the reformed GST on any mediclaim policy. This reform of the mediclaim tax GST provides financial security to individuals and families.

For example, on purchasing the My Health Care Plan from Bajaj General Insurance for an individual or floater basis, you can enjoy 0% GST on mediclaim premiums.

Benefits of Implementing GST 2.0 for Policyholders

Increase Savings on Mediclaim Premium

The elimination of the 18% GST on mediclaim premiums reduces the financial burden on policyholders, allowing them to save significantly. This change makes mediclaim premium payment easier, whether you are paying yearly or monthly.

For example, senior citizens also benefit from reduced medical premium loads. They can save substantial amounts and utilise them for routine check-ups or medicines.

Promote Higher Accessibility of Medical Policies

The GST reform, which eliminates GST on medical premiums, makes purchasing health insurance schemes more financially accessible to both rural and urban segments nationwide. This change supports the national objective of ensuring citizens have access to basic healthcare protection and increases medical insurance penetration. 

0% GST on mediclaim premiums also influences younger and first-time buyers to invest in medical insurance. It provides them with financial security against emergencies.

Enhance Coverage Benefit in the Same Budget

With lower premiums, individuals can now enjoy higher coverage without exceeding their budget. The 0% GST on mediclaim premiums allows you to buy more comprehensive coverage for your family at the same cost.

For instance, instead of a ₹3 lakh medical package, you can opt for a ₹7 lakh coverage without paying extra. This promotes more protection at just the base premium cost.

Social and Economic Implications

The GST exemption on medical premiums from September 22, 2025, is a strategic move towards inclusive growth. The reduction of out-of-pocket medical expenses alleviates financial burdens on households and strengthens India's medical care ecosystem.

The 0% GST on mediclaim premiums improves the risk pool and influences younger policyholders. Thus, ultimately fosters a more resilient healthcare system and ensures long-term stability for insurance.

How to Maximise More Savings on Taxes with Mediclaim Policies?

1. Buy or Renew After Sept 22: To maximise benefits on taxes, ensure your policy starts on or after the GST exemption date, 22nd September 2025.

2. Upgrade Coverage: Utilise the tax saving amount to increase your sum insured for more comprehensive protection.

3. Choose Family Floaters: Cover your entire family under one mediclaim policy, making it more cost-effective with 0% GST on mediclaim cover.

4. Consider Senior Citizen Plans: High premiums for seniors are now more manageable due to tax relief. You can choose a suitable plan for your parents, also with 0% GST on the mediclaim premium.

5. Review Existing Policies: Check if your renewal can be scheduled after September 22, 2025, to maximise your savings.

6. Add Optional Covers: Include extra benefits like OPD or critical illness without worrying about higher premiums and GST.

By following these tips, you can make the most of the GST exemption and enjoy better coverage while saving on taxes.

Bottom Line: Wider Accessibility with Greater Affordability

The reformed GST on mediclaim premium from September 22, 2025, reduces the 18% tax on premium payments, benefiting millions of policyholders. 0% GST applied on mediclaim schemes offers instant savings and provides tax benefits for individuals, senior citizens or retired persons.

This mediclaim premium with GST exemption empowers all Indians to access excellent quality healthcare services with robust medical coverage without any tax burden.

FAQs

What types of medical insurance policies are covered under the new GST exemption?

The GST exemption starting from 22nd September 2025 applies to individual health insurance policies, including individual mediclaim policies, family floater medical plans, critical illness plans, and senior citizen health insurance plans.

How much GST do I have to pay on a 5 lakh rupee life insurance policy?

Under the new government regulations, mediclaim policies are now completely GST-free, regardless of the coverage amount. Whether your plan offers ₹5 lakh or ₹10 lakh cover, you pay no GST on the premium. For instance, a ₹25,000 family plan earlier attracted ₹4,500 GST, now, you save that amount, making health insurance more affordable for all.

Can I claim an input tax credit on medical insurance policy premiums as a corporate employee?

No, as per Section 17(5) (b) of the Central Goods and Services Tax Act in India, Input Tax Credit (ITC) cannot be claimed on GST paid for mediclaim premiums, even for group policies taken out for employees.

Is the GST waiver temporary or permanent?

The GST waiver on health insurance premiums is presently indefinite. Although there is no specified end date, the GST Council retains the authority to revisit and revise this decision in the future. As of September 22, 2025, mediclaim policies are exempt from GST, but future changes may impact this exemption.

Can I get benefits for my existing medical policy from GST changes?

Yes, you can avail the GST exemption on your existing medical policy by paying your premium on or after September 22, 2025, the effective date of the change. Premiums paid before this date will still attract 18% GST, and no refunds will be issued for earlier payments.

Does GST reform affect the policy claim settlement process?

No, the GST exemption does not change the existing claim settlement process. The insurers will continue to follow standard procedures for policy issuance and claims, including documentation and verification.

Will the GST exemption reduce medical coverage benefits?  

The GST exemption does not impact medical coverage benefits. Mediclaim tax GST only reduces the premium cost, making it more affordable. The policy features, benefits, and coverage remain unchanged.

*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.