In a move aimed at making health coverage more affordable, the GST Council chaired by Union Finance Minister Nirmala Sitharaman has exempted health insurance premiums from Goods and Services Tax (GST). Insurers will also be allowed to utilise input tax credits, a measure industry watchers say balances consumer relief with sectoral growth.
After the Council meeting, Sitharaman said the decision underscores the government’s commitment to expanding access to healthcare and financial protection. She noted that easing the tax burden is likely to encourage more families, particularly the middle class and senior citizens, to opt for health insurance.
Rakesh Jain, CEO of Reliance General Insurance, welcomed the decision, saying: “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.”
Experts said the reform could significantly boost insurance penetration in India while enhancing household financial resilience amid rising medical expenses.
