No GST on Life and Health Insurance Premiums from September 22
New Delhi, Sep 3: In a big relief for policyholders, the Goods and Services Tax (GST) on individual health and life insurance premiums has been reduced from 18% to 0%. The decision was taken at the 56th GST Council meeting and will be implemented from September 22, 2025.
Finance Minister Nirmala Sitharaman announced that this step will make insurance more affordable for the common man and help increase insurance coverage across India.
Insurance Policies Covered
The exemption will apply to:
- Life Insurance – Term Plans, ULIPs (Unit Linked Insurance Plans), Endowment Plans, and their reinsurance.
- Health Insurance – Individual Plans, Family Floater Policies, Senior Citizen Plans, and their reinsurance.
Impact on Policyholders
Currently, insurance premiums attract 18% GST. For example, if the base premium is ₹100, a customer pays ₹118 (₹100 + ₹18 GST).
With GST exemption, customers will now pay only ₹100, the base premium quoted by the insurer. According to industry experts, this move will reduce the effective cost of insurance by nearly 15%, making policies more affordable and helping boost insurance penetration in the country.
GST Council’s Wider Changes
Apart from insurance, the GST Council, chaired by Finance Minister Sitharaman, also rationalized the overall tax structure. The Council reduced the existing four GST slabs into two slabs by removing the 12% and 28% rates, while retaining only 5% and 18%.
These changes to GST rates on services will also come into effect from September 22, 2025.
