GST Removed On Insurance Premiums, Life & Health Policies Now Cheaper For Everyone

New Delhi: In a major decision that benefits millions of policyholders, the central government has removed the 18 percent GST on all individual life and health insurance premiums, effective Monday, September 22, 2025. This means buying or renewing insurance policies will now be significantly cheaper. The exemption covers family floater, senior citizen, and reinsurance policies as well.

How Much Can You Save?

Since July 2017, insurance premiums included 18 percent GST. With this tax now removed, individuals can save up to 18 percent on their insurance payments, depending on their policy size. This applies to all types of individual life policies — term insurance, ULIPs (Unit Linked Insurance Plans), and endowment plans.

Decision Taken at 56th GST Council Meeting

The move came after the 56th GST Council meeting held on September 3, chaired by Union Finance Minister Nirmala Sitharaman, along with finance ministers of all states. The council decided to exempt GST for all individual life and health insurance services, including reinsurance.

Following the announcement, major insurers like LIC (Life Insurance Corporation of India) and other public sector companies confirmed they would implement this GST exemption immediately.

Govt Collected Over Rs 16,000 Crore via GST on Insurance in FY24

In the financial year 2023–24, the government earned Rs 16,398 crore from GST on life and health insurance premiums. This included Rs 8,135 crore from life insurance and Rs 8,263 crore from health insurance. An additional Rs 2,045 crore came from reinsurance.

GST 2.0 Reforms in Action

As part of broader GST 2.0 reforms, the Council has also simplified GST rates. Products previously in 12 percent and 28 percent slabs are now moving to lower 5 percent and 18 percent rates. Only select luxury items will attract the special 40 percent GST.

Published on: Monday, September 22, 2025, 05:10 PM IST