As of September 3, 2025, the GST Council approved a major reform: the 18% Goods and Services Tax on individual health and life insurance premiums has been completely removed, bringing the GST rate down to nil. This decision is part of the broader GST 2.0 overhaul aimed at simplifying the tax structure and easing the financial burden on consumers.
When Does This Take Effect?
The exemption will formally come into force on September 22, 2025—marking the first day of Navratri. From that date onward, any new individual life or health insurance policies, as well as renewals falling on or after that date, will no longer carry the 18% GST markup.
Who Benefits?
- New buyers of individual health or life insurance (including term plans, ULIPs, endowments, family floater plans, and senior citizen policies).
- Renewals of eligible individual policies scheduled on or after September 22, 2025.
Group policies are not currently part of this exemption unless specified later by notifications from CBIC.
What About Current or Advance Payments?
- If you’ve already paid your premium, including GST, no refunds will be issued for the tax already collected.
- Renewals or payments made before September 22 will still include the old 18% GST rate.
Impact on Your Pocket
- You can save roughly 15% on your insurance costs, as the GST component (which used to be around that amount) is eliminated.
- However, because insurers lose the benefit of Input Tax Credit (ITC) when GST goes to zero, there’s a possibility—depending on each insurer’s cost structure—that premiums or features might get adjusted over time.
What Should You Do?
- If your coverage isn’t urgent, it’s financially smart to wait until September 22, 2025, to avail of the GST-free premium—leading to immediate savings.
- If you need coverage right away, don’t delay—having insurance is more important than saving the tax portion later.