In the Lok Sabha, Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary, answered Unstarred Question No. 1323 on Monday, July 27, 2026/Shravana 5, 1948 (Saka), regarding GST Exemption on Health Insurance.
The Minister informed the House that GST rates and exemptions on the supply of goods and services are prescribed on the recommendations of the GST Council, a constitutional body comprising representatives of the Union Government and the State and Union Territory Governments.
The GST Council, in its 56th meeting held on September 3, 2025, recommended GST exemption on all individual life insurance policies and all individual health insurance policies, including family floater policies, along with the reinsurance of such policies.
Accordingly, GST exemption was granted on the supply of individual life and health insurance policies, including family floater policies, and their reinsurance with effect from September 22, 2025, through Notification No. 16/2025-CTR dated September 17, 2025.
The Minister stated that the impact of the rate changes and exemptions could be assessed from the growth in insurance premium collection after September 22, 2025.
Premium collection in the individual life insurance segment recorded growth of 11.2 per cent during October–March 2025-26, compared with growth of 7.7 per cent during October–March 2024-25.
In the individual health insurance segment, including family floater policies, premium collection registered a substantial growth of 29.7 per cent during October–March 2025-26, compared with 7.0 per cent during the corresponding period of 2024-25.
The comparative growth in insurance premium collection is as follows:
| Insurance segment | October–March 2024-25 | October–March 2025-26 |
| Individual Life Insurance | 7.7% | 11.2% |
| Individual Health Insurance, including Family Floater | 7.0% | 29.7% |
The Minister said that these rate changes and exemptions are aligned with the Government’s vision of “Insurance for All” by making individual life and health insurance policies more affordable.
To ensure that the benefit of the GST exemption was passed on to consumers, the Department of Financial Services convened a meeting immediately after the exemption was notified. The meeting was attended by senior officials of the Insurance Regulatory and Development Authority of India, Chairpersons and Managing Directors of public-sector insurance companies, Chief Executive Officers of leading private-sector life and non-life insurance companies, and officials of the Life Insurance Council and the General Insurance Council.
During the meeting, insurance companies were advised to ensure that the benefit of the GST exemption was fully passed on to both existing and prospective policyholders.
The Insurance Regulatory and Development Authority of India also held meetings with the Chief Executive Officers and Appointed Actuaries of insurance companies and sensitised them to ensure that the full benefit of the GST exemption reached policyholders.
In January 2026, IRDAI received confirmation from all general, health and life insurance companies that they had not revised premium rates on account of the GST exemption and that the relief granted by the Government had been duly passed on to policyholders.
The GST exemption has, therefore, directly benefited existing and prospective policyholders by reducing the overall cost of individual life and health insurance.
The Minister further informed the House that insurers are required to reverse the Input Tax Credit attributable to the exempt supplies. However, insurance companies have confirmed that they did not increase premium rates following the GST rate revision.
The Answer can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/07/LS-GST-Exemption-on-Health-Insurance-27.07.2026.pdf
