- Explore Group Health Tax Benefits
- Section 80C
- Section 80D
Simran is an insurance expert with more than 4 years of experience in the industry. An expert with previous experience in BFSI, Ed-tech, and insurance, she proactively helps her readers stay on par with all the latest Insurance industry developments.
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Updated on Apr 18, 2025 3 min read
Group Health Insurance Tax Benefits For Employees and Employers
Group health insurance plans are offered to employees to safeguard their finances. Group health is a crucial employee benefit, leading to employee retention and a strategic investment for employers. Beyond this, group health insurance also provides tax advantages, allowing employers to deduct premium payments and lower their taxable income.
Discover the tax benefits available to employers and employees under group health insurance. This guide also covers all tax deductions available for employees and employers.
How Do Tax Benefits For Employers Work?
All employers who offer group medical insurance to their employees are eligible for several tax benefits. Under Section 80C of the Income Tax Act, all the expenses borne by the company for buying group health insurance for their employees are eligible for tax benefits. Additionally, tax benefits availed from group health insurance are considered ’employer entitlement’ as per the Insurance Regulatory and Development Authority of India Act, 1999.
All the premiums paid towards a group health insurance are considered to be business expenses.
How Do Tax Benefits For Employees Work?
Employees who contribute to their group health insurance premiums can claim income tax deductions under Section 80D. It’s common for both employees and employers to share the cost of these premiums.
Let us help you understand further how GST plays an important role in group health insurance tax benefits
What Is The Role of GST In Group Health Insurance?
An 18% Goods and Services Tax (GST) is applied to group health insurance premiums, which contributed to the overall rise in premium costs. However, businesses can avail of tax benefits by claiming the paid GST as an Input Tax Credit, effectively reducing the net cost of the insurance policy.
Additionally, both employers and employees who contribute to the premiums are eligible for tax deductions under Section 80D of the Income Tax Act.
Which Organizations Are Eligible For Group Tax Benefits?
Employers who are eligible for group health insurance tax benefits are:
- Partnership Firms
- Public Companies
- Private Companies
- Sole Proprietors
- Start-up
- Mid-level Companies
- Small Businesses
- Non-profit Organizations
- Government Agencies
What Are The Benefits Of Group Health Insurance?
The multiple benefits of a group health insurance plan are given below for you to understand this topic in depth.
| For Employer | For Employee |
| Employee retention increases as there is a sense of peace regarding medical expense coverage | Comprehensive coverage is available for self, spouse, parents, and children. |
| Promotes a healthy work culture | Pre-existing diseases are covered from day 1 |
| Boosts employee morale and productivity as they do not have to worry about medical expenses | Enhance your coverage with available riders and add-ons |
| Can share the premium cost with employees and gain tax benefits | The overall premium is lower than any individual or family health insurance plan |
| Tax benefits under Section 80C of the Income Tax Act | Tax benefits are applicable under section 80D if employees pay their premiums |
Conclusion
Group health insurance in India offers numerous benefits to both employers and employees. Both parties benefit from group health plans. Employers enjoy tax-free deductions while employees enjoy tax-free medical coverage. To understand tax benefits with group health insurance as an employer or employee, you must understand deductions and GST credits. Group health insurance fosters a stress-free work environment and helps retain the best talent within a company.
Connect with PolicyX health insurance experts to understand more about group health insurance tax benefits.
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Group Health Insurance Tax Benefits For Employees and Employers: FAQs
1. What is a group health insurance?
Group health insurance is a mediclaim plan bought by the employer for its employees. The insurance plan premiums are usually fully paid by the employer. However, in some organizations, the employer and employee share the premium cost.
2. Is group health insurance premium taxable?
No, group health insurance is not taxable for the employer as the premiums paid are eligible for tax deductions under section 80C.
3. Can employees avail of any tax benefits with group health insurance?
Yes, if you are paying health insurance premiums partially for your group health insurance plan, you are eligible for tax deductions under section 80D.
4. Is group insurance eligible for 80C?
Yes, tax benefits are applicable under section 80C of the Income Tax Act if the insurer pays full premiums toward the group health insurance for its employees.
5. Is tax deduction available under section 80D for group health insurance?
Yes, section 80D applies to employees who pay their premiums partially for group health plans.
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Written By: Simran Kaur Vij
Simran is an insurance expert with more than 4 years of experience in the industry. An expert with previous experience in BFSI, Ed-tech, and insurance, she proactively helps her readers stay on par with all the latest Insurance industry developments.
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