“The net outgo for individual consumers has been reduced for products like Health Insurance, Personal Accident & Travel Insurance, maintaining the same policy coverage and claims servicing standards” Naveen Chandra Jha, MD and CEO, SBI General Insurance
New Delhi: Insurance premiums of life and health insurance have become cheaper from Monday 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 Monday.
The decision to this effect was taken at the 56th GST Council meeting held on September 3. The council decided to exempt all individual life insurance policies, whether term life, ULIP or endowment policies and subsequent reinsurance from GST.
Following the GST Council, public sector insurance companies, including Life Insurance Corporation of India (LIC), announced the exemption of GST.
Naveen Chandra Jha, MD and CEO, SBI General Insurance, said SBI General Insurance has passed on full benefit of GST reforms to all individuals, making insurance more accessible and affordable. Accordingly, the net outgo for individual consumers has been reduced for products like Health Insurance, Personal Accident & Travel Insurance, maintaining the same policy coverage and claims servicing standards.
“The GST exemption applies to new policies, portability as well as migration cases enabling individual policyholders, including the first-time buyers, to benefit from lower insurance premiums across these categories. With this, we reaffirm our commitment to the government’s vision of ‘Insurance for All by 2047’, added Jha.
Tarun Chugh, MD & CEO of Bajaj Allianz Life Insurance, said “The exemption of GST on life insurance premiums is a landmark move that will make protection more affordable and accelerate insurance penetration across the country.
“ Over time, this change has the potential to drive higher policy uptake, renewals and broader coverage.As part of the transition to a GST exempt regime, we are already communicating with our customers and agents about the benefit arising through this change. Our entire ecosystem is completely ready to serve our customers in an era of lower premiums due exemption from GST effective 22nd September 2025.”
Anand Roy, Star Health and Allied Insurance, comented,”The Government’s decision to exempt health and life insurance premiums from GST marks a pivotal shift for the industry. This reform will reshape the insurance landscape, accelerating penetration, driving higher renewal rates, building deeper customer loyalty and a critical catalyst for future growth. This sets the stage for an era of enhanced insurance penetration which has remained critically low, making coverage more affordable and accessible.”
Amit Chhabra, chief business officer at Policybazaar, said “For the customers, it is an extremely beneficial move because they are getting an 18 per cent instant discount on health insurance and life insurance.”
Balachander Sekhar, Co-founder & CEO of RenewBuy, said that by removing the 18 per cent GST burden, the government has made protection more affordable, accessible, and attractive for millions of households.
The government had collected ₹16,398 crore from goods and services tax (GST) levied on healthcare and life insurance in FY24.
Of this, ₹8,135 crore came from life insurance and ₹8,263 crore from health insurance. Additionally, ₹2,045 crore was also raised as GST from re-insurance on life and health insurance last fiscal, including ₹561 crore from reinsurance on life and ₹1,484 crore on health care.
GST on healthcare and life insurance services brought in ₹16,770 crore in FY23, including ₹9,132 crore from life insurance and ₹7,638 crore from healthcare insurance.
The 56th GST Council, chaired by Union Finance Minister and comprising ministers from all states, has agreed on two tax rates of 5 and 18 per cent by moving products from the current 12 and 28 per cent slab to lower rates.
A special 40 per cent rate would be levied on a select few items.
A 4-tier GST structure of 5, 12, 18 and 28 per cent was implemented from July 1, 2017, when the Centre and states agreed to subsume most of their taxes, like excise duty and VAT, into one uniform tax.