The government has exempted GST on all individual life and health insurance policies, including family floater plans, following a recommendation of the GST Council, Minister of State for Finance Pankaj Chaudhary informed in a written reply to the Rajya Sabha.
GST Council Decision on Insurance
The Minister said that GST rates and exemptions are prescribed based on recommendations of the GST Council. In its 56th meeting held on September 3, 2025, the Council recommended granting GST exemption on individual life insurance policies and individual health insurance policies, including their reinsurance.
Impact on Premium Costs and Coverage
The removal of the 18 percent GST on insurance premiums is expected to significantly reduce costs for policyholders and make insurance more affordable, particularly for underserved populations in both rural and urban areas.
The Minister said the exemption is aimed at encouraging wider adoption of life and health insurance, improving insurance density, and strengthening risk-sharing mechanisms to cushion households against economic shocks.
The GST exemption aligns with the government’s vision of ‘Insurance for All’ and the broader goal of Viksit Bharat at 2047, the Minister said. By improving affordability and access, the measure supports financial inclusion and strengthens insurance as a pillar of sustainable and inclusive economic growth.
Ensuring Benefits Are Passed On to Policyholders
To ensure that the benefit of GST exemption is fully passed on, the Department of Financial Services (DFS) convened meetings with senior officials of the Insurance Regulatory and Development Authority of India (IRDAI), CMDs of public sector insurers, CEOs of private life and non-life insurance companies, and representatives of the Life Insurance Council and General Insurance Council.
IRDAI also held a day-long in-person interaction with insurance companies on September 17, 2025, during which insurers agreed to hold premium rates and pass on the full GST benefit to policyholders.
The regulator has collected premium rates prevailing as on September 3, 2025, when the GST relief was announced, and is monitoring premiums for both new and renewal policies. IRDAI has sought clarifications from insurers to ensure that premiums were not increased after the announcement of GST exemption.
All general and health insurers have confirmed that premium rates were not increased and that the GST relief has been fully passed on to policyholders. This confirmation was communicated by IRDAI to DFS through a letter dated January 7, 2026, the Minister informed.
Source from: https://knnindia.co.in/news/newsdetails/economy/no-gst-on-life-and-health-insurance-premiums-after-council-nod-govt
