INSURANCE
GST exemption lowers life & health insurance premiums
Sep-23-2025

Insurance premiums of life and health insurance have become cheaper from September 22, 2025 following the complete removal of 18 per cent Goods and Services Tax (GST) as next generation GST 2.0 reforms kicked in.  All individual health insurance policies, including family floater policies and policies for senior citizens and reinsurance, are exempt from GST effective September 22. Since its inception in July 2017, GST at the rate of 18 per cent has been levied on premiums paid towards health insurance and life insurance. Individual policyholders can save up to 18 per cent GST levied on the insurance premium by any insurer from September 22.

The decision to this effect was taken at the 56th GST Council meeting held on September 3, 2025. The council decided to exempt all individual life insurance policies, whether term life, ULIP or endowment policies and subsequent reinsurance from GST.

The government has collected Rs 16,398 crore from GST levied on healthcare and life insurance in FY24. Of this, Rs 8,135 crore came from life insurance and Rs 8,263 crore from health insurance. Additionally, Rs 2,045 crore was also raised as GST from re-insurance on life and health insurance last fiscal, including Rs 561 crore from reinsurance on life and Rs 1,484 crore on health care. GST on healthcare and life insurance services brought in Rs 16,770 crore in FY23, including Rs 9,132 crore from life insurance and Rs 7,638 crore from healthcare insurance.


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