For some time now, we have been witnessing a sharp rise in medical inflation, almost three times the rate of general inflation, combined with the increasing cost of hospitalisation and medical procedures. Nearly sixty percent of healthcare expenditure in India continues to be paid out of pocket, putting enormous pressure on households.
In such an environment, GST on health insurance further limited access to financial protection. It became clear that the healthcare ecosystem needed a systemic change to make it more affordable, transparent, and accessible for all.
As part of this effort, through the GI Council and CII, we had recommended to the government that the GST on health insurance be reduced to zero for senior citizens and to five percent for all other citizens. At the same time, we highlighted the need to create a more integrated and efficient ecosystem through initiatives such as the Common Empanelment of hospitals and the National Health Claims Exchange (NHCX), which we have consistently advocated for.
We have encouraged more hospitals to actively enrol and use the NHCX platform, along with insurers and TPA’s, to bring in greater transparency, efficiency, and speed in claims settlement.
We also emphasised the establishment of a hospital regulator to ensure fairness, quality, and standardisation across the healthcare sector. These steps together, we believed, could transform the accessibility and affordability of healthcare for every Indian.It is therefore heartening to see the government take such a bold and decisive step by bringing GST on health and life insurance to zero. This reform has immediately reduced the cost of protection by 18 percent for millions of families, especially for those in the missing middle who were earlier unable to afford insurance. The impact is already visible. Citizens renewing or purchasing policies are paying lower premiums, enabling many more to secure themselves and their loved ones against medical and financial shocks. It has also encouraged people to enhance their coverage through options such as super top ups and OPD covers, which were earlier the uptake was relatively lower.
This move is part of a much larger vision to make healthcare affordable and accessible. On the supply side, the government has also reduced GST on medical devices, diagnostic items, and hospital supplies, and kept GST at nil for critical and life-saving medicines.
Together, these measures will help bring down treatment costs and make quality healthcare more reachable for citizens. They will also reduce claim costs and improve efficiency across the value chain, allowing the benefits to flow directly to patients and policyholders.
The combination of zero GST on insurance and lower GST across the healthcare ecosystem will go a long way in making healthcare truly inclusive. It not only improves affordability but also builds confidence among people to seek treatment without the fear of financial ruin. It gives families a sense of dignity and security, knowing that quality healthcare is within reach.
This reform also demonstrates the power of collaboration between government and industry. It shows that when dialogue is continuous and purpose is shared, transformation follows.
The decision has infused positivity across the sector, streamlined business processes, and brought all stakeholders onto a more collaborative and customer-centric platform. It has also reinforced the government’s commitment to making India not just a well-insured nation by 2047 but a healthy one.
The next crucial step will be to ensure that every hospital, large or small, urban or rural, is integrated into the NHCX platform. This will bring transparency, efficiency, and real-time claim processing, greatly improving the experience for patients and insurers alike.
The creation of a health regulator will further strengthen accountability and standardisation, ensuring that healthcare delivery remains fair, consistent, and patient-focused. With the kind of forward-looking, citizen-centric approach we are seeing, I am confident that these milestones will be achieved sooner rather than later.
The decision to abolish GST on insurance is therefore not just a policy change; it is a statement of intent, a reflection of governance with empathy. It acknowledges that for India to grow stronger, its people must first feel secure. It empowers citizens to protect themselves, while also inspiring the industry to innovate responsibly and serve with greater care.
When governance listens and responds, it builds trust, and when that trust is translated into action, it becomes the foundation of progress.
The government’s vision to make healthcare accessible and insurance affordable for every Indian is a milestone that will be remembered for years to come. It gives new meaning to the spirit of the Bachat Utsav, a celebration of savings, protection, and the shared belief that when every citizen is cared for, the nation thrives together.
(The author is Chairman, CII National Committee on Insurance and Pensions; Chairman, General Insurance Council; and MD and CEO, Bajaj General Insurance)
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