Why 18% GST on Health Insurance?

Health Insurance and 18% GST: What You Need to Know

The 18% GST on health insurance has sparked widespread argument, with many people believing that it makes health insurance more expensive. The tax rate under GST has been proposed at 18% in 2017 for all health insurance premium income. 

Let us find out why this 18% GST is applied and its impact:

●Uniform Tax Structure
GST amalgamates all the multiple indirect taxes of India. Earlier, service tax alone was at 15 percent, along with other costs like health insurance. All of those have now been brought under one umbrella called the GST at an aggregate percentage of 18 per cent. Thereby making it easy, though at the cost of a higher burden on the consumer.

●Classification as a Service
Under the GST framework, health insurance is classified as a service. Like any other service, it is subjected to an 18% tax rate. The government treats it as a financial service rather than a healthcare service, which otherwise would attract a lower or nil rate of taxation.

It has, for the government, brought about a sizable amount in terms of 18% from health insurance. The entire GST income is used to finance public healthcare, infrastructure, and other welfare schemes.

●Indirect Push Toward Preventive Health Care
It indirectly promotes preventive health care and wellness through this health insurance tax. For that, it focuses on the need for health preservation rather than depending only on the insurance for the necessary medical bills.

●Global Comparison
Even in many countries, health insurance premiums pay various taxes or levies. Even though the 18% GST is charged, it is within international trends wherein insurance services are charged to some degree.
Added costs may prevent people from buying or renewing health insurance policies. They succumb to the mercy of financial outlays during medical emergencies.

●Calls for Reduction
The calls for reduction or total exemption of GST on health insurance have been continuous. Consumer groups and industry experts are in unison in calling for such a reduction. According to them, health insurance is a financial product that everyone must have. The reduction of tax will motivate more people to buy policies, hence benefiting the country at large.

Despite the tax burdens, health insurance remains essential in our day-to-day lives. Star Health Insurance offers plans that aim to provide comprehensive coverage at affordable premiums. It ensures you receive quality healthcare while minimising the impact of GST. Star Health helps you to make the right choices, ensuring you and your family gain significant benefits in your life.