GST Exemption on Health Insurance Premiums Hailed as Game-Changer for Consumers and Industry

Bhubaneswar: The GST Council, chaired by Union Finance Minister Nirmala Sitharaman, has announced a major reform by exempting health insurance premiums from Goods and Services Tax while allowing insurers to utilise input tax credits. The move is being widely seen as a dual benefit measure that makes health insurance more affordable for consumers while supporting the growth of the insurance sector.

Sitharaman said the Council’s decision reflects the government’s commitment to making healthcare and financial protection more accessible. “Health insurance is an essential safeguard for families, and reducing the tax burden on premiums will encourage greater participation, especially among the middle class and senior citizens,” she noted after the meeting.

Welcoming the announcement, Rakesh Jain, CEO of Reliance General Insurance, called it a landmark step. “The GST Council’s decision to exempt health insurance premiums while allowing insurers to utilise input tax credits is a landmark step that combines consumer benefit with industry growth. This reform will make health protection more affordable for millions of families, senior citizens, and small businesses who often find premiums to be a stretch. By lowering the cost of entry, it encourages more individuals to seek coverage earlier, thereby strengthening the risk pool and improving the long-term resilience of the insurance sector. Insurance is not just a financial product but a safeguard for households against rising healthcare costs and unforeseen emergencies, and this measure will help embed it more deeply into financial planning. We view this as a forward-looking reform that creates a win-win scenario for both consumers and insurers, and one that will contribute meaningfully to the journey of building a healthier and more financially secure India,” he said.

Industry experts believe the reform will not only boost insurance penetration in India but also create stronger financial resilience across households at a time when healthcare costs continue to rise.