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.
This change took place on 22nd September 2025, where the GST rate charged on such policies was lowered from 18% to 0%. The rationale for this amendment is to make health insurance more accessible to individuals and to increase broader insurance adoption.
This exemption is limited to individual health insurance policies only, since group health insurance policies are subject to a GST rate of 18% in 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 Increases the Total Cost of a Group Health Insurance Plan
The GST impacts the total cost of the group health insurance plan in different ways:
- GST is applied at 18% of the base premium, so the final payment will always be higher than the quoted premium.
- The GST amount is also higher if the premium is increased owing to more employees, higher coverage or add-ons to the policy.
- 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 enhances the welfare of employees.
- Group health coverage is cheaper compared to individual health coverage.
- 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.
Usually, no. Employees do not pay GST separately on company-provided health insurance. The GST is included in the premium paid by the employer to the insurer.
Individual health insurance policies became GST-exempt in 2025 as part of a government initiative to make health insurance more affordable for individuals.
GST is normally charged on the total insurance premium charged by the insurer. This includes the base premium and any additional costs that form part of the policy premium. Consequently, the increase in the premium will automatically lead to an increase in the GST amount.
Yes. Add-on covers and riders bought with a group policy, such as top-up sums insured or maternity extensions, are taxed at 18% unless a specific exemption applies to them.
About the authors
Neviya Laishram
Written by · Senior Editor – Health, Life and Group Health Insurance Content at ACKOWith a journalism background, she brings 9 years of experience in strategising and editing health, life, and group health insurance content. Having written for magazines and digital publications, she combines research and editorial expertise to create credible, useful content for readers.
Nitesh Kapur
Reviewed by · Senior Director – Underwriting & Claims, Group Health Insurance at ACKOWith over 15 years of experience in health insurance underwriting, he has led group health insurance strategy, risk assessment, and policy design. He has held leadership roles at leading insurers, building risk frameworks, evaluating complex health risks, and strengthening underwriting standards.
