New Delhi : A Good news for crores of all Indian policyholders! there is great news for every Indian regarding the GST Exemption. The GST Council has recently announced that retail life and health insurance premiums will no longer required or added 18% GST. This move of government is expected to make insurance more affordable and encourage, therefor more people will buy life and health insurance. GST Exemption on Life & Health Insurance Premiums make more easier for all.
Till now, every premium payment attracted an additional 18% GST, which are making insurance or health policies more expensive . these are one of the discouraging reasons for many households from purchasing insurance. but With this exemption of government , the premium paid will go entirely towards life or health coverage, without any extra tax burden.
What Was the Situation Earlier?
Earlier, every buy policyholders had to pay Goods and Services Tax (GST) along with their premium amount. The GST rate was at that is :
- 18% on health insurance premiums
- 4.5% to 18% on life insurance premiums, depending on the type of policy
Which increased the overall cost of all insurance policies and making life and health insurance policy’s more expensive for middle-class families. here we are understand through a example, if someone was paying a ₹20,000 premium for health insurance, an additional ₹3,600 was added as GST. this will extra burden ₹3,600 on policyholder .
Direct Savings for Policyholders due to GST Exemption
For example, a health insurance premium of ₹25,000 earlier cost ₹29,500 after GST. Now, customers will pay only ₹25,000, here you can see resulting in an annual saving of ₹4,500 to policyholder. Experts say this could significantly improve policy persistency, as fewer people will discontinue due to high costs.
GST Exemption on Life & Health Insurance Premiums Boost for Insurance Sector
Insurance Industry experts are believe that the decision of goverment of GST Exemption will encourage new buyers and expand insurance coverage in India, where penetration levels remain relatively low. The move also aligns with the government’s long-term goal of achieving “Insurance for All by 2047.”
What’s Next?
The GST Exemption on Life & Health Insurance Premiums will apply to retail life and health insurance policies. With insurance becoming cheaper, experts expect a sharp rise in policy purchases in the coming months. LIC and private insurers may also launch awareness campaigns to encourage people t o get covered. Further clarification is awaited on whether corporate group insurance plans will continue to attract GST.
This decision of government is being seen as a landmark reform in India’s insurance sector, promising both affordability for families and growth for insurers.
What is the effective date for GST exemption on insurance?
The GST Exemption on Life & Health Insurance Premiums is effective from September 22, 2025. Premiums paid or renewed after this date are GST-free.
Which policies are covered under this GST?
All individual life and health insurance policies—including family floater, senior citizen, critical illness, and term plans—are covered. but here are some clarification required on Group policies , where it may not get benefit.
Will premiums already paid get a GST refund?
No. if GST are already paid on past or future-dated premiums is not refundable, these all rule are only payments made after September 22, 2025, are exempt. don’t come in any Froud talk for refunding of old paid premiums. be aware always.
