5 hrs ago
GST Cut Removed Tax, but Did Not Guarantee Cheaper Premiums
Individual health and life insurance policies stopped having GST added on September 22, 2025.
This means people pay the policy’s base price without that tax.
If the base price stays the same, the total bill falls by about 15.25%, not 18%.
People with existing policies get the change when they renew after that date.
New individual policies get the zero-tax rate right away.
Insurance provided through an employer or another group plan still has 18% GST.
Insurers also lost the ability to recover some taxes they pay on their business costs.
The article says more people bought health insurance, so total premiums collected rose, but that figure alone does not show that individual policy prices increased.
From September 22, 2025, GST on individual health and life insurance policies fell from 18% to zero.
With the base price unchanged, removing GST cuts the former total bill by about 15.25%, not 18%.
Existing policyholders receive the exemption at their first renewal after the change; new policies qualify immediately.
Employer-sponsored and other group health and life policies remain subject to 18% GST.
Insurers lost input tax credits on their costs; reported premium growth reflects increased business volume and does not by itself establish that prices rose.
- Who
- Individual health and life insurance policyholders, insurers, and people covered by group plans.
- What
- GST on individual policies was cut from 18% to zero, while group policies remain taxed at 18%.
- Where
- India.
- When
- The change took effect on September 22, 2025; existing policies receive it at their first renewal after that date.
- Why
- The GST Council decision removed the tax on individual policies; insurers also lost input tax credits on their own costs.
Consumer tax relief
Insurer cost pressures
Effect on individual policyholders
Consumer tax relief
Removing GST lowers the amount payable on individual policies; with no change in the base price, the reduction is about 15.25% of the previous total.
Insurer cost pressures
The exemption removes only the tax. It does not automatically reduce the policy’s base price, which may change separately.
Effect on insurers
Consumer tax relief
Policyholders receive the benefit of the removed GST at renewal or when purchasing a new individual policy.
Insurer cost pressures
Insurers lose input tax credits on their business costs, raising running costs and creating pressure against further base-price reductions.
Key facts
- Previous GST rate
- 18% on individual health and life insurance policies
- New GST rate
- 0% on individual health and life insurance policies from September 22, 2025
- Expected bill reduction
- About 15.25% of the former total, if the base premium is unchanged
- Example
- A ₹20,000 base premium previously totaled ₹23,600 with GST; without GST, it is ₹20,000
- Group policies
- Employer-sponsored and other group health and life policies continue to attract 18% GST
- Existing policies
- The exemption applies at the first renewal after September 22, 2025
- Insurer cost change
- Insurers can no longer claim input tax credit on costs associated with zero-rated policies
- Reported retail health premium growth
- 19% by February 2026, according to General Insurance Council data reported by Financial Express
Sources
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