0% GST on Health & Life policies starting September 22
In a major pro-consumer reform, the GST Council announced on 3rd September 2025 that individual life and health insurance policies will now attract 0% GST, down from the earlier 18%.
This move takes effect from 22 September 2025, and is expected to significantly reduce insurance premiums, making protection more affordable for millions of Indians.
What does the 0% GST mean for you?
Until now, insurance premiums attracted steep GST rates of 18%! From 22 September 2025 this will be 0%!
This translates into a direct saving on premiums. For example, a ₹10,000 premium will now cost exactly ₹10,000 instead of ₹11,800.
Why this matters: The protection gap
India has long struggled with low insurance penetration:
- Less than 4% of Indians have individual health insurance.
- Many families remain just one hospitalisation or untimely death away from financial distress.
- High premiums are a key barrier for many middle-income and low-income households.
With premiums falling by up to 15%, more people are likely to:
- Buy their first life or health policy
- Opt for higher coverage or longer policy terms
- Cover senior citizens or children in family floaters
This reform is a step forward in narrowing India’s protection gap.
The impact of GST exemption
On insurers:
Premiums fall = greater demand
New customers enter the market
Insurers may face short-term margin pressure, especially in retail health, due to repricing delays (12–18 months). But higher volumes may offset this.
On the government:
In FY24, India collected ₹16,398 crore in GST from insurance:
- ₹8,263 crore from health insurance
- ₹8,135 crore from life insurance
- ₹2,045 crore from reinsurance
This move represents a major revenue sacrifice, but also a clear policy shift toward financial inclusion.
The reform also removes GST from reinsurance premiums, helping insurers manage costs, and potentially pass on more savings.
What customers should do next
- Don’t delay: If you’ve been postponing a health or term plan, this is your time.
- Upgrade your cover: Use the premium savings to increase your sum assured.
- Add family members: Consider covering parents or children under one floater.
- Review existing policies: Talk to your agent/broker about upgrading post 22 Sept.
The best time to insure is…
From 22 September 2025, individual life and health insurance will officially be GST-free.
✅ More affordable
✅ More accessible
✅ More essential than ever
There has never been a better time to secure your family’s future. Don’t wait. Insure smart – starting 22 September 2025.
This blog post is brought to you by the minds at insurancepe!
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