In a historic move aimed at boosting financial inclusion and easing household budgets, the 56th GST Council meeting in September 2025 has scrapped the Goods and Services Tax (GST) on individual health and life insurance policies. The reform, effective from September 22, 2025, is being hailed as one of the most people-centric outcomes of the #NextGenGST initiative.
What Changed Under #NextGenGST? (GST-Free Insurance: From 18% to Zero)
Until now, individual policyholders were paying 18% GST on premiums for life and health insurance. Starting September 22, that burden drops to zero.
The exemption covers:
👉 Life insurance policies – Term plans, ULIPs, endowment plans, etc.
👉 Health insurance policies – Individual and family floater plans, including senior citizen policies.
This means every premium paid by households for protection policies will no longer attract GST, making insurance more affordable for millions.
How Consumers Benefit
For the average policyholder, this reform translates into 10–15% lower premiums on out-of-pocket costs, according to industry estimates.
💡 Example: A ₹25,000 annual health premium earlier attracted ₹4,500 GST. That amount is now completely waived off.
👉 Families can buy higher coverage without stretching budgets.
👉 Young professionals may be encouraged to purchase term insurance earlier.
👉 Senior citizens struggling with high premiums for health coverage stand to gain the most.
Experts believe this could significantly increase insurance penetration in India, where only a fraction of the population is adequately insured.
The Fine Print: Insurers’ Concerns
While the move is a direct relief for policyholders, insurers face a new challenge. With GST exemption, they lose input tax credits (ITC) on reinsurance, agent commissions, and service costs.
👉 This means insurers’ costs go up, raising questions on how much of the benefit will truly be passed on to consumers.
👉 Industry bodies have urged regulators to ensure transparent pricing and fair benefit transfer to policyholders.
In short, the success of this reform will depend on competitive pricing and strong oversight.
Why This Reform Matters
The government’s intent is clear:
- Support the common man by lowering essential financial burdens.
- Boost household financial security by making insurance universal and affordable.
- Align India’s insurance penetration goals with global benchmarks.
Insurance industry veterans call this reform a “game-changer for financial inclusion”, especially for labor-intensive and middle-class households.
Broader #NextGenGST Changes
The GST Council also announced relief measures for households and businesses:
👉 Lower GST on essential daily-use goods.
👉 Restructuring of GST slabs to simplify compliance.
👉 Rationalization of rates for labor-intensive sectors.
But the GST exemption for health and life insurance is easily the biggest win for household finances, directly affecting millions of families.
The Road Ahead
The GST-free insurance era marks a bold step toward India’s vision of universal financial and health security. If implemented effectively, it will not only ease the cost of protection but also build resilience among households against medical emergencies and income uncertainties.
For the first time, insurance is being treated not as a luxury, but as a necessity—a right that every Indian family should be able to afford.
📌 Key Takeaway: From September 22, 2025, health and life insurance premiums in India are 100% GST-free. A small policy change with a massive impact, potentially transforming how Indians protect their families and futures.
#NextGenGST #InsuranceReform #HealthInsurance #LifeInsurance #FinancialInclusion #GSTIndia #InsuranceForAll #HouseholdSecurity #GSTNews #GSTCouncilMeeting #GSTReforms
References
- Times of India: GST reforms—0% GST on individual health and life insurance
https://timesofindia.indiatimes.com/business/india-business/gst-reforms-0-gst-on-individual-health-and-life-insurance-reduced-from-18/articleshow/123681997.cms - Economic Times: GST on health and life insurance premiums reduced to zero
https://economictimes.com/wealth/insure/gst-on-health-and-life-insurance-premiums-reduced-to-zero-see-how-it-will-impact-your-policy-costs/articleshow/123682131.cms - Hindustan Times: GST rate cut: Individual health, life insurance policies exempt now
https://www.hindustantimes.com/india-news/gst-rate-cute-life-insurance-health-policies-for-individual-exempt-now-101756919249782.html - Business Today: Health and life insurance exempted from GST
https://www.businesstoday.in/india/story/big-relief-health-and-life-insurance-exempted-from-gst-as-council-scraps-12-and-28-slabs-492405-2025-09-03 - Taxo Online: GoM members agree in-principle on exemptions for life, health insurance
https://taxo.online/latest-news/02-09-2025-gom-members-agree-in-principle-on-exemptions-for-life-health-insurance/ - Financial Express: Life and health insurance set to get full GST exemption
https://www.financialexpress.com/business/industry-life-and-health-insurance-set-to-get-full-gst-exemption-3965296/ - India Today: GST exemption on life, health insurance: Will consumers really benefit?
https://www.indiatoday.in/opinion/story/gst-exemption-on-life-health-insurance-will-consumers-really-benefit-2781323-2025-09-03 - The Munim: What are Rates and Exemptions for GST on Health Insurance?
https://themunim.com/gst-on-health-insurance/ - Mathrubhumi English: Next-Gen GST reforms slash tax on essentials, healthcare
https://english.mathrubhumi.com/news/money/gst-news-next-gen-gst-reforms-slash-tax-on-essentials-healthcare-cars-and-education-e58phrew - Economic Times (Industry): GST cut on insurance premiums may lower costs; insurers brace for impact
https://economictimes.com/industry/banking/finance/insure/gst-cut-on-insurance-premiums-may-lower-costs-insurers-brace-for-near-term-impact-report/articleshow/123673708.cms
Discover more from DailyDozes NEWSPAPER
Subscribe to get the latest posts sent to your email.