GST has been applicable on almost all types of insurance plans in India, including health insurance. But from 22nd September 2025, people can buy tax-free health insurance policies as the premiums will be GST-free. At ACKO, we’re already offering policies that reflect this change, helping you save on health insurance with 0% GST. In this article, we’ll break down what this GST exemption means, how it affects your premiums, and why choosing ACKO can make your health cover more affordable and hassle-free.
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Across India, most goods and services are subject to a single indirect tax called the Goods and Services Tax (GST). Introduced to simplify the taxation system, GST replaced multiple central taxes such as service tax, excise duties, customs duties, and various cesses and surcharges. Health insurance, like many other products and services, was also included under GST, meaning premiums were previously taxed along with other goods and services.
Until recently, purchasing a health insurance policy in India included an 18% GST on the premium, including individual plans, family floaters, and senior citizen coverage. Following the 56th GST Council meeting on September 3, 2025, the GST council announced a major reform: from 22nd September 2025, all new health insurance policies are completely GST-free. This means policyholders no longer have to pay extra tax on top of their base premium, making health insurance more affordable and straightforward.
The reduction of GST from 18% to 0% on all individual health insurance policies is a welcome relief, making coverage more affordable and accessible for everyone. Now the no GST on Health Insurance reform highlights the growing importance of medical insurance in today’s world, encouraging even first-time buyers to prioritise their health.
By removing the tax burden, this move not only strengthens financial protection for individuals and families but also supports the development of a more robust healthcare ecosystem in India, while giving a boost to the health insurance sector.
In addition to protecting you financially in the case of a medical emergency, purchasing health insurance enables you to reduce your tax obligations significantly. You can save up to Rs. 1 lakh under Section 80D of the Income Tax Act if you buy insurance for yourself and your family.
You are also allowed to deduct the cost of the preventative health checkup in addition to the insurance premium. A maximum exemption of Rs 5,000 is permitted under preventive health checkups annually. Note that the tax-related information is subject to changes as per the annual budget and other similar policies.
Here is a list of different types of taxes applicable on health insurance plans.
Until 21st September 2025, health insurance premiums in India were subject to GST, typically at 18%. This tax was added on top of your premium, increasing the overall cost of your policy. From 22nd September 2025, all new health insurance policies, including those issued by ACKO, are completely GST-free, meaning the premium you pay is the base amount, no extra tax added.
Insurance companies previously claimed Input Tax Credit for GST paid on services like office rent, legal or accounting services, and more. This helped insurers reduce their overall GST liability, sometimes indirectly affecting premium rates. With the new 0% GST rule, this aspect becomes less relevant for new policies, but insurers like ACKO continue to optimise costs to keep premiums affordable.
While we have tax-free health insurance premiums, certain medical services outside your policy coverage may still attract GST, such as elective treatments or consultations paid directly by you.
Making a claim on your ACKO policy remains unaffected by GST. The claim amount you receive is not subject to any GST, ensuring you get the full benefit of your coverage.
Government-sponsored health insurance schemes may have their own tax treatments, but for private policies like ACKO’s, the new 0% GST rule applies to all eligible policies issued after 22nd September 2025.
With GST removed, policyholders now pay only the premium amount, making health insurance more affordable. Health insurance continues to provide critical financial protection against high medical costs, and with ACKO, you get simple, transparent coverage without hidden charges.
Policyholders can still enjoy tax benefits under Section 80D of the Income Tax Act. You can claim deductions on premiums paid for yourself, your spouse, children, and parents, subject to certain limits and conditions.
Earlier, when renewing a health insurance policy, policyholders had to pay the same GST rate (18%) that applied to new policies. However, from 22nd September 2025, there will be no GST on health insurance policies, including renewals issued by ACKO, which are completely GST-free, meaning you only pay the base premium without any extra tax. For policies purchased before the GST exemption, standard renewal rules apply until the new tax-free policies take effect.
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Reviewed by Dr. Harshita Dahiya 
Acko Technology & Services Private Limited
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