New Delhi. Finance Minister Nirmala Sitharaman announced that all individual health insurance policies, including family floater policies and policies for senior citizens and reinsurance, will now be exempt from GST.
Announcing the outcome of the 56th GST Council meeting, Sitharaman said that all individual life insurance policies, whether term life, ULIP, or endowment policies, and their reinsurance will also be exempt from GST. Since the implementation of GST in July 2017, health insurance and life insurance premiums were subject to an 18 percent GST. Sitharaman also stated that all individual health insurance policies, including family floater policies and policies for senior citizens and reinsurance, will now be exempt from GST. These changes will come into effect from today, September 22, 2025.
Let’s understand how much you’ll save on your premiums
with an example. If you’re paying a premium of ₹15,000 (including 18 percent GST) for a ₹2.5 million health insurance policy, it will now be reduced to ₹12,800. This means that an individual will save approximately ₹2,500 on their premium amount when these new GST reforms come into effect.
Similarly, if you were paying ₹10,000 for a ₹1 crore term insurance policy, it would come down to around ₹8,500. So, a consumer would save around ₹1,500.
What Experts Say:
According to experts, this move is a bold step towards making insurance more accessible. We heartily thank the government for this important decision to remove GST from life and health insurance. This sends a clear message that health and life insurance are vital products for the economy and are therefore now GST-free. Term insurance, in particular, is a vitally important product, and this move will have an unprecedented positive impact on the entire category. At a time when healthcare costs are constantly rising, this decision will ease the financial burden and reduce the barrier for millions of Indians to secure their health and financial future. This move aims to promote financial inclusion, protect vulnerable families, and create a culture of long-term security. It will be remembered as a progressive reform that provides assurance to countless families, while also ensuring product innovation and energizing the insurance industry to reach the heart of India.
The GST Council’s decision to exempt health insurance premiums and allow insurers to utilize input tax credits is a historic step that combines consumer benefits and industry growth. This reform will make health coverage more accessible to millions of families, senior citizens, and small businesses who often find premiums a burden. By reducing the cost of entry, it encourages more individuals to take out coverage earlier, strengthening the risk pool and improving the long-term resilience of the insurance sector. Insurance is not just a financial product but a safeguard for families against rising healthcare costs and unexpected emergencies, and this measure will help integrate it more deeply into financial planning. We see this as a visionary reform that creates a win-win scenario for both consumers and insurers and will significantly contribute to the journey towards a healthier and more financially secure India.
The GST Council’s decision to reduce taxes on the healthcare sector is a transformative step towards greater accessibility and inclusivity. At a time when India’s healthcare market is poised for significant growth, this reform serves as a timely catalyst to strengthen the ecosystem by addressing one of the biggest barriers to access to quality healthcare. Whether making life-saving medicines more accessible or reducing the cost of health insurance, this move directly addresses a long-standing challenge and will enable millions of families to take a significant step towards financial and medical security. For the health insurance sector, this change comes at a crucial moment. As India’s healthcare needs grow and medical risks evolve, the importance of universal health coverage has become more evident than ever. Health insurance is not just a financial product; it is a lifeline that protects families, supports well-being, and builds resilience against future uncertainties.
