The Indian government confirmed on Wednesday that a recent GST exemption for insurance had lowered costs for policyholders. The GST Council had recommended an exemption for all individual life insurance policies, health policies (including family floaters) in September last year.
“The GST exemption ,by eliminating the 18% tax overlay, directly reduces premium costs and encourages broader adoption. These reforms will elevate India’s insurance density to create a resilient society where economic shocks are mitigated through widespread risk-sharing,” assured MoS Pankaj Chaudhary.
The clarification came in the form of a written response in the Rajya Sabha amidst the ongoing Budget Session of Parliament.
The GST council had eliminated the 18% cess previously charged on individual health and life insurance premiums following a meeting in September 2025. The move had sparked concerns about a cost increase for consumers — since the insurers would no longer by able to offset costs such as commissions and rentals against GST on the premium. Brokerages had subsequently predicted a 1% to 4$ hike in the base cost in order to recover potential losses.
‘GST benefits passed onto consumers’
He also confirmed that the IRDAI has been “monitoring the premiums being charged for new policies as well as for renewal of policies” to ensure that the benefits were passed on to insured individuals. The Insurance Regulatory and Development Authority of India has been “seeking clarifications from insurers” to ascertain whether their premiums had increased following the GST relief announcement. Chaudhary told the Rajya Sabha that all general and health insurance entities in the country confirmed earlier this year that premium was not increased while the GST cut was “fully passed on the policyholders”.
According to the answer submitted before the Rajya Sabha, the Department of Financial Services has convened meetings with IRDAI officials, CMDs of public sector insurers, CEOs of private players, and representatives from Life and General Insurance Councils to ensure benefits reached consumers.
GST on medical texts?
The Minister of Finance also fielded questions about GST on medical and educational books from the Lok Sabha earlier this week. MP Trivendra Singh Rawat had sought to know whether the government was aware that “GST GST levied on medical and educational books is imposing an additional financial burden on students and learners”.
“GST rates and exemptions are prescribed on the recommendations of the GST Council, which is a constitutional body comprising representatives from the States/UTs and Centre. Presently, printed books, including Braille books, are exempt from GST,” came the written response from Chaudhary.
