BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.
Medical insurance is an important tool for protecting yourself and your family from high healthcare costs. But did you know that even insurance premiums are taxed under the Goods and Services Tax (GST)? In this article, we’ll explain the GST rate on medical insurance, the HSN code used, how it impacts your premium, and what it means for both individuals and businesses.
Under the current GST regime, medical insurance premiums are taxed at a rate of 18%. This rate is applicable whether you’re buying an individual health insurance policy, family floater plan, or even a group policy provided by employers.
| Type of Insurance | GST Rate |
|---|---|
| Health / Medical Insurance | 18% |
| Critical Illness Plans | 18% |
| Personal Accident Plans | 18% |
The HSN Code for health insurance services is 997133. This code falls under the larger group of financial and related services under GST.
| Service Description | HSN Code | GST Rate |
|---|---|---|
| Health Insurance Services | 997133 | 18% |
Insurance companies use this code on invoices and policies to show applicable tax.
Let’s say your annual health insurance premium is ₹25,000 (before tax).
That means, for a ₹25,000 cover, you actually end up paying ₹29,500 due to GST.
Businesses can claim ITC on medical insurance if:
However, if it’s offered as a voluntary employee benefit, ITC is not allowed.
If you’re buying insurance for yourself or your family, you cannot claim ITC as it’s a personal expense.
Yes, GST is included in the premium amount you pay, even if you’re claiming a deduction under Section 80D of the Income Tax Act. However, the tax portion is also included in the eligible deduction.
For example:
The government considers insurance a financial service, and under the GST regime, all financial and banking services are taxed at 18%. While some argue that medical insurance is a necessity and should be taxed lower, the rate has remained unchanged since the introduction of GST.
While medical insurance provides financial safety during health emergencies, the addition of 18% GST increases the premium payable. Though businesses can recover some of this cost through ITC, individuals cannot. That said, it’s still wise to invest in health insurance—GST or not—because the cost of being uninsured is far higher
BUSY is a simple, yet powerful GST / VAT compliant Business Accounting Software that has everything you need to grow your business.