GST on health insurance for individual and family floater policies is now nil: since 22 September, premiums for health insurance bought by an individual, and for individual term, endowment and ULIP life policies, are exempt from GST. Before that, the premium carried 18%, which added a large sum to every renewal.
Group health and group life policies bought by an employer, a society or any other group still pay 18%, and so does motor insurance. This page explains which policy is which, what to check on your premium receipt and why the premium may not fall by the full 18%. Vehicle cover is on the car insurance GST page.
Health and life insurance: codes and GST rates
Item / SAC / GST- Individual health insurance, including family floaterExemptFrom 22 September; was 18%
- Senior citizen health policies bought individuallyExemptSame exemption
- Individual term life insuranceExemptWas 18%
- Endowment and ULIP policies for individualsExemptWas charged at a reduced effective rate before
- Group health insurance from an employer18%Not covered by the exemption
- Group term life insurance18%Bought by employers or groups
- Motor and vehicle insurance18%General insurance, not exempt
- Reinsurance of individual health and life policiesExemptExempted with the main policies
Quick facts
SAC
99713: insurance and pension servicesLife insurance code
997131Health insurance code
997133 (accident and health)Individual policies
Exempt since 22 SeptemberGroup policies
18% (9% CGST + 9% SGST)Rate before the reform
18% on individual health and term premiums
GST on health insurance before and after
Under the old rules, an individual paying a health premium of Rs 20,000 paid Rs 3,600 as GST on top. Now the premium carries no GST at all. The same applies to the renewal of an existing individual policy: the rate is decided on the date the premium falls due and is paid, so renewals after 22 September have no GST.
The exemption covers policies where the insured is an individual or a family. A policy bought by a company for its staff is a group policy, even if each employee gets a separate card.
Group policies and employers
An employer paying for group health or group life cover pays 18% GST. Whether it can take input tax credit depends on section 17(5): credit on health and life insurance is blocked unless the employer must provide the cover under a law in force. Many employers therefore treat this GST as a cost. Commission paid to insurance agents is a separate service; see commission codes.
Insurance hsn code on receipts
Premium receipts show SAC codes rather than HSN codes, since insurance is a service. Life insurance is 997131 and health and accident insurance is 997133. If your receipt still shows GST on an individual health or term policy renewed after 22 September, ask the insurer to explain or correct it. TDS rules on insurance commission are covered on the TDS on GST page.
This is general information on how GST applies to insurance premiums under the current exemption. Policy wording decides whether a cover is individual or group, so check your policy schedule and the latest notification on the GST portal, and ask a GST practitioner or chartered accountant if you are unsure about your case.
Frequently asked questions
Is there GST on health insurance now?
No GST is charged on individual health insurance policies, including family floater and senior citizen policies, since 22 September. Group policies still carry 18%.
What is the GST on term insurance?
Individual term insurance is exempt from GST. Group term life policies bought by employers pay 18%.
What is the insurance hsn code?
Insurance uses SAC codes: 997131 for life insurance and 997133 for health and accident insurance. Motor insurance is 997134.
Is GST charged on car insurance?
Yes, motor insurance is still taxed at 18%. Only individual life and health policies were exempted.
Can an employer claim ITC on group health insurance?
Usually not, because section 17(5) blocks it unless the employer must provide the cover under a law.