On September 22, 2025, the 18% GST on individual and family health insurance was scrapped. A year on, the headline numbers are striking — and so are the fine print caveats.
Read more: IRDAI's 2026 Health Insurance Overhaul: 8 Changes That Reshaped Coverage for Every Indian.The Growth Story
The Finance Ministry told the Lok Sabha in July 2026 that individual health insurance premium collection grew 29.7% in October-March 2025-26, against 7.0% a year earlier; individual life insurance grew 11.2% versus 7.7%. IRDAI confirmed in January 2026 that no insurer had revised premium rates on account of the exemption — meaning the relief was passed through, not pocketed.
The Input Tax Credit Caveat
There is a nuance. With GST removed, insurers can no longer claim input tax credit (ITC) on their own costs — CBIC has clarified ITC on individual policy commissions is blocked under Section 17(5) of the CGST Act. That adds a small cost pressure, which is why the practical saving is close to, but not exactly, 18%.
Who Still Pays 18%
Group and employer health insurance remains outside the exemption. If your cover comes from your workplace, nothing has changed. The exemption covers individual, family floater and senior citizen policies — including NRI-bought individual policies.
What to Check at Renewal
Your renewal notice should now show no GST line. Use the saving deliberately: raise your sum insured, add a super top-up, or buy cover for parents who were previously priced out. Combined with IRDAI's 2026 health reforms — a shorter five-year moratorium, no maximum entry age, and capped senior premium hikes — this is the cheapest moment in years to be well covered.
Sources: Lok Sabha reply (July 27, 2026), CBIC Circular, Firstpost (July 20, 2026)