GST Return on Health Insurance for NRIs

A GST refund on health insurance is available for NRIs who pay premiums through an NRE account for policies from Indian insurers. Explore the benefits and process to claim your refund, reduce tax liabilities, and save on healthcare costs.
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3 min
03-March-2025

The Goods and Services Tax (GST) applies to health insurance policies in India, including those purchased by Non-Resident Indians (NRIs). A standard GST rate of 18% is levied on premiums. However, NRIs may be eligible for a GST refund if the premium is paid in foreign currency and certain conditions set by tax authorities are met. Understanding these regulations can help NRIs optimize costs while ensuring adequate health coverage for their families in India.

What is GST return on health insurance for NRIs?

GST return on health insurance refers to the potential refund of the Goods and Services Tax (GST) paid on health insurance premiums by Non-Resident Indians (NRIs). When an NRI purchases a health insurance policy from an Indian insurer, an 18% GST is applied to the premium. However, if the premium is paid in foreign currency and meets specific tax criteria, NRIs may be eligible for a refund. Understanding these provisions helps NRIs reduce their financial burden while ensuring their family members in India have adequate health coverage. The refund process involves meeting the eligibility conditions and filing the required documents with tax authorities.

Eligibility criteria for NRIs to claim GST return on health insurance

To claim a GST refund on health insurance, NRIs must meet the following conditions:

  1. Payment in foreign currency: The insurance premium should be paid using foreign currency from an NRI’s overseas account or an international payment method.
  2. Policyholder’s status: The health insurance policy should be purchased by an NRI for themselves or family members residing in India.
  3. GST compliance: The insurer should be a GST-registered entity, and all transactions must comply with GST regulations.
  4. Documentary proof: NRIs must maintain proper documentation, including policy details, premium receipts, and payment proof, to apply for a refund.
  5. Refund claim process: The claim should be filed within the stipulated time frame as per GST laws, following the prescribed procedures.

Meeting these criteria can help NRIs recover a portion of their tax expenses, making health insurance more cost-effective.

Is GST applicable to health insurance for NRIs?

Yes, GST returns apply to health insurance premiums paid by NRIs for policies purchased in India. The tax is levied on the premium amount paid for the insurance policy, which includes health insurance. The GST returns are determined by the Indian government and are subject to change based on policy revisions. NRIs need to stay updated on the GST file process, these rates to accurately calculate their insurance costs.

GST refund for NRIs on health insurance purchased in India

NRIs can avail of a GST refund on health insurance premiums if they meet specific conditions set by Indian tax laws. This provision ensures that non-residents are not unfairly taxed on services they may not fully utilize in India. To qualify for the refund, the health insurance premium must be paid in foreign currency, and the policy must comply with GST regulations. This refund mechanism helps NRIs reduce their financial burden while ensuring comprehensive medical coverage for their families in India.

Also, read: GST on health insurance and its impact on insurance premium

How can NRIs claim a refund on GST for health insurance premiums?

To claim a GST on medical insurance refund, NRIs must follow the prescribed procedure, which includes filing returns, providing necessary documentation, and sometimes, a detailed application explaining the claim for a refund. The process can be initiated through the GST portal or by contacting the insurance provider directly, as some companies offer assistance with GST-related queries.

Steps to obtain GST refund on health insurance for NRIs

The GST refund process for NRIs on health insurance premiums involves several steps, ensuring compliance with Indian tax regulations. NRIs who meet the eligibility criteria can claim a refund by following a structured approach. Proper documentation and timely submission are essential for a smooth refund process.

  • Registration on the GST portal: NRIs must first register on the official GST portal to initiate the refund process.
  • Filing the refund application: Submit Form GST RFD-01 on the portal to apply for the refund.
  • Submission of necessary documents: Attach all required documents, including proof of premium payment in foreign currency.
  • Follow-up: Regularly track the application status and coordinate with tax authorities or the insurer if needed.

What are the GST rates on medical insurance premiums in India?

The GST returns on medical insurance premiums, including health insurance, are set by the Indian government. As of the last update, the GST on medical insurance rate for health insurance premiums stands at 18%. This rate applies uniformly to policies purchased by residents and non-residents alike.

What documents are required to get a GST refund on health insurance for NRIs?

The documents required for obtaining a GST returns on health insurance premiums typically include:

  • Copy of the health insurance policy as proof of coverage.
  • Payment receipts showing the GST amount paid.
  • Bank account details for processing the refund.
  • Copy of the NRI’s passport to verify non-resident status.
  • Additional documents as required by GST or insurance authorities.

Ensuring all documents are accurate and complete helps NRIs expedite the refund process without unnecessary delays.

Benefits of GST refund for NRIs

Claiming a GST return on health insurance offers several financial advantages for Non-Resident Indians (NRIs). It helps reduce the overall cost of insurance premiums by allowing eligible NRIs to recover the 18% GST paid. This makes health insurance more affordable while ensuring comprehensive medical coverage for family members in India. Additionally, a GST refund promotes fair taxation, ensuring that NRIs who pay premiums in foreign currency are not unduly burdened. By utilizing this refund, NRIs can optimize their financial planning, save on unnecessary tax expenses, and continue to secure quality healthcare benefits for their loved ones.

Are NRIs eligible for GST exemption on specific health insurance plans?

NRIs are generally not exempt from GST on health insurance plans. However, certain government schemes or insurance plans designed specifically for low-income groups or specific categories may have exemptions or reduced GST rates. NRIs should consult with their insurance providers or tax consultants to understand if their chosen plans qualify for any exemptions.

Read in detail about: Health insurance for NRI

Pro Tip

A comprehensive health plan not only covers hospitalization but also pre & post-treatment expenses, ensuring complete financial protection against rising medical costs.

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Common mistakes to avoid when filing GST return on health insurance

When filing a GST return online for health insurance, NRIs should be cautious to prevent errors that could delay or reject their refund claims. One common mistake is not registering on the GST portal, which is mandatory for claiming a refund. Submitting incomplete or incorrect documents, such as missing payment receipts or an invalid passport copy, can also lead to rejection. Additionally, failing to pay the premium in foreign currency may make NRIs ineligible for a refund. Delays in filing Form GST RFD-01 within the prescribed timeframe can further complicate the process. Ensuring accuracy and timely submission helps in smooth refund processing.

Conclusion

GST returns on health insurance are a vital part of financial planning for Non-Resident Indians (NRIs). A clear understanding of GST applicability, refund procedures, and required documentation enables NRIs to efficiently manage their health insurance expenses in India. By staying updated on tax regulations and ensuring timely compliance, they can reduce financial burdens and make informed decisions. Seeking professional advice when necessary can further simplify the process, ensuring a hassle-free experience. Proactively managing GST returns not only helps NRIs optimize their savings but also ensures uninterrupted health coverage for their families in India.

Frequently asked questions

Is GST applicable to health insurance for NRIs?
Yes, GST (Goods and Services Tax) is applicable to health insurance premiums paid by Non-Resident Indians (NRIs) for policies purchased in India. This means that when NRIs buy health insurance for themselves or their families in India, the premium includes GST, similar to policies bought by residents.
How can NRIs claim a refund on GST for health insurance premiums?

NRIs can claim a refund on GST for health insurance premiums by following a specific procedure outlined by the Indian tax authorities. The process generally involves:

  • Registration on the GST portal: NRIs must first register themselves on the official GST portal.
  • Filing a refund application: After registration, they need to file a refund application using the form GST RFD-01 on the portal.
  • Document submission: Along with the application, relevant documents such as a copy of the insurance policy, payment receipts, and NRI proof (like a passport copy) must be submitted.
  • Refund processing: Once the application and documents are verified, the refund process will be initiated by the tax authorities.

It's advisable to check the official GST portal or consult with a tax professional for the most current procedures and requirements.

What are the GST rates on medical insurance premiums in India?
As of the latest update, the GST rate on medical insurance premiums, including health insurance, is set at 18%. This rate is applicable to both health insurance policies purchased by residents and NRIs. Keep in mind that GST rates are subject to change based on government policy, so it's a good idea to stay informed about any updates.
Are NRIs eligible for GST exemption on specific health insurance plans?
Generally, NRIs are not exempt from GST on health insurance plans. However, there may be specific government schemes or insurance plans targeted at low-income groups or certain categories that offer GST exemptions or reduced rates. To find out if a particular health insurance plan qualifies for GST exemption, NRIs should consult with their insurance provider or a tax consultant.
Can I claim GST on health insurance?

Individuals cannot claim an input tax credit on health insurance, but eligible NRIs can apply for a GST refund if they meet the required conditions.

What happens to insurance when you become NRI?

Most existing health insurance policies remain valid, but NRIs should check policy terms, payment options, and tax implications to ensure continued coverage.

Who can claim refund in GST?

GST refunds can be claimed by businesses, exporters, and NRIs on eligible health insurance premiums, provided they meet the required tax regulations.

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