GST on Insurance

As per the recent GST Council announcement, Goods and Services Tax or GST on individual life and health insurance has been discontinued. This will come into effect from September 22, 2025 and onwards

Below are the instances where GST has been discontinued for insurance policies:

• New individual health and life insurance policies issued on and after September 22, 2025.
• Renewal premiums for individual existing health and life policies due on or after September 22, 2025

Since the current amendment applies only to individual policies, GST on insurance at applicable rates will continue to be charged in the case of group policies. Additionally, since this new exemption rate is applicable specifically to term life, Unit Linked Insurance Plan (ULIP), endowment and health insurance, GST will continue to be applicable in the case of other types of insurance products such as motor insurance, home insurance, etc.

Prior to the exemption being announced, in most cases, individual life insurance policies featured a 18% GST rate. However the effective GST rates for different types of life insurance products were not the same. To help you understand this better, the below table illustrates the GST rates applicable to different types of life insurance policies before and on & after September 22, 2025:

Below is a list of few popular government insurance schemes that were already exempt from GST on insurance and will continue to be exempted from GST on or after 22 September 2025:

1. Aam Aadmi Bima Yojna
2. Pradhan Mantri Jan Dhan Yojna
3. Insurance is provided to the Navy, Army and Air force by the state and central government
4. Varishtha Pension Bima Yojna
5. Pradhan Mantri Vaya Vandana Yojna
6. Group Saral Surakhsa / Microinsurance
7. Pradhan Mantri Jeevan Jyoti Bima Yojna

Note: The above list is illustrative and not exhaustive, so there may be other types of insurance in India that are exempt from GST.

The removal of GST on life and health insurance plans is expected to reduce the cost of purchasing and renewing these essential types of insurance. This will not only benefit existing policyholders but also increase the affordability of life and health insurance policies for new policyholders. This increase in affordability, is expected to drive penetration of these insurance plans in India and provide protection to a larger portion of the country’s population.