For buying a new policy call 094444 48899. For customer service call 1860 425 0000.

Royal Sundaram iTalk

insurance blog from Royal Sundaram

GST and its impact on health insurance

Posted by Royal Sundaram on 11 Aug 2017


What is GST?

  • Ø A single indirect tax to bind multiple taxes levied by the State and Central governments in order to have a more unified taxation system.
  • Ø GST will subsume taxes like Central Excise Duty, Service Tax, Special Additional Duty of Customs, VAT, Central Sales Tax, Purchase Tax, Luxury Tax and Entertainment Tax, among others.
  • Ø It is meant to eliminate dual taxation and simplify the process for businesses.

Impact on Insurance:

  • Ø With the introduction of GST, only the saving component of the premium is exempted from tax, whereas, the Risk Factor of a premium element will be taxed.
  • Ø Insurance policy rates will escalate as an umbrella tax of 18% will be levied on all policies, causing a short-term inflation.
  • Ø Therefore, existing and new policyholders will see a hike of 3% in their premium amounts. So, a premium of 30,000 ₨ will see an increase of 900 ₨.
Policies Rates before GST Rates after GST
Motor insurance 15% 18%
Health insurance 15% 18%
Term insurance 15% 18%
ULIP 15% 18% (only on premium amount, not investments)
Endowment plan premium (first year) 15% 18% (On 3.75 percent of the total premium)
Endowment plan (renewal) 15% 18% (On 1.875 percent of the total premium)



Need of insurance:

  • Although healthcare has been exempted from GST, some services and products are likely to become costlier. Medicines and disposables fall under 12% tax slab, however, the cost of diagnostic services like surgery and operations are going to increase by a substantial amount.
  • An insurance policy will provide a highly beneficial cover against these rising costs. Post GST, do not look at health plans with a financial lens. Your health is priceless. A three percent increase shouldn’t discourage you from securing your health.

Join over 25,000

of your peers and receive our italk (insurance talk) newsletter with actionable advice on travel, motor, health and home needs right in your inbox!

*We won't spam you, promise

Leave a Reply

Your email address will not be published. Required fields are marked *