What is the GST Rate on Group Health Insurance in India?
The GST rate on group health insurance is 18% as of 2026. This applies to the premium an employer pays an insurer for providing health insurance coverage to employees.
For instance, if the organisation's group health insurance annual premium is ₹10 lakh, the 18% GST adds ₹1.8 lakh to the total cost of ₹11.8 lakh. Knowing this calculation enables organisations to determine how much money they need to spend on the medical insurance coverage.
GST Changes in 2025: Individual vs Group Health Insurance
The 56th GST Council meeting in September 2025 made all individual life and health insurance policies GST-free. This included family floater and senior citizen plans.
The change came into effect on 22 September 2025, reducing the GST rate on these policies from 18% to 0%. The objective was to make health insurance more affordable for individual policyholders and encourage wider insurance adoption.
However, the exemption does not extend to group health insurance policies. Corporate health insurance, employer-sponsored medical cover, and other group plans continue to attract 18% GST as of 2026.
GST on Individual vs Group Health Insurance
The table below compares the two types of health coverage to help you understand the differences at a glance.
Feature | Individual health insurance | Group Health Insurance |
|---|---|---|
GST rate | 0% (exempt) | 18% |
Who buys the policy | You, for yourself or family | Your employer, for staff |
Who pays the GST | Not applicable, it is exempt | The employer, in the premium |
Effective date of change | 22 September 2025 | No change, still 18% |
Learn how the 0% GST rule applies to individual health insurance.
How is Group Health Insurance Treated for Tax Purposes?
In most cases, an employer may deduct the expense of providing group health insurance to the employees from the taxable income of the business. This applies to the premium of the policy and to the GST on it. The situation is different when Input Tax Credit (ITC) is not permitted, in which case the GST component would not be recoverable from the government.
In fact, it would be added to the total expenditure of offering health insurance to the workforce.
Input tax credit is not automatic
The GST law blocks input tax credit on employee health insurance by default. The credit only opens up where the cover is legally obligatory or otherwise meets the conditions in the law. Do not assume the 18% is always recoverable; check your specific case before offsetting it.
How GST Affects the Total Cost of Group Health Insurance
GST increases the total cost of a group health insurance policy in several ways:
GST is charged at 18% on the base premium, so the final amount paid is always higher than the quoted premium.
If the premium goes up because of more employees, higher coverage, or add-ons, the GST amount also goes up.
For large organisations, GST can noticeably increase the cost of providing health insurance to employees.
Is Group Health Insurance Still Worth It with 18% GST?
Yes. Even with 18% GST, corporate health insurance remains a valuable benefit for employers.
It helps attract and retain employees.
It supports employee well-being and financial security.
Group policies are often more cost-effective than individual policies purchased separately.
Employers can customise coverage based on workforce needs.
The premium paid towards the policy can generally be treated as a business expense for income tax purposes.
Providing health insurance can strengthen an organisation's employee benefits package and employer brand.
Key Takeaways
Until 2026, the premium rate for group health insurance continues to remain at 18% GST, and that of individual health insurance is exempt from GST.
Employers usually pay the GST. It is included in the premium paid by the employer to the insurer.
Group health insurance has tax benefits, as the cost of providing it can be treated as a business expense. This helps reduce the company's taxable income.
Frequently asked questions
It is 18% as of 2026. The rate did not change. Group health policies still attract 18% GST on the premium.
About the authors
Neviya Laishram
Written by · Senior Editor
Nitesh Kapur
Reviewed by · Senior Director – Underwriting & Claims, ACKO Group Health Insurance
