In short: From 22 September 2025, GST on all individual life insurance and individual health insurance premiums was cut from 18% to zero. Term plans, endowment policies, ULIPs, individual health covers, family floaters and senior citizen plans are all exempt. Group policies, including employer group health, continue to attract 18%. The exemption applies by payment date: any premium paid on or after 22 September 2025 is GST-free, regardless of when the policy was issued. Nearly a year on, the practical questions are different: did your renewal premium actually reflect the change, and why did some premiums fall less than 18%?
What Changed and When
The GST Council's September 2025 reform package ("GST 2.0") exempted individual life and health insurance premiums, including reinsurance on those policies, with effect from 22 September 2025. Before that date, an insurer quoting a ₹20,000 base health premium collected ₹23,600 from you; after it, the same base premium bills at ₹20,000. The cut-off is the date the premium is paid: instalments paid before 22 September 2025 carried 18% GST even if the due date fell later, and everything paid on or after that date is exempt.
What Is Exempt and What Still Pays 18%
| Policy type | GST now |
|---|---|
| Individual term insurance | 0% |
| Individual health insurance (incl. family floater, senior citizen, top-up) | 0% |
| Endowment / whole life / money-back (individual) | 0% |
| ULIPs (individual) | 0% |
| Employer / group health and group life policies | 18% |
The group-policy carve-out matters for planning: your employer's group cover still carries GST (a cost your employer bears), while your personal policy no longer does, one more reason the personal policy you control has become relatively cheaper to maintain alongside employer cover. On why you should hold both, see our guide on common health insurance mistakes.
Why Premiums Did Not Fall a Full 18% Everywhere
If your renewal fell by less than the full GST amount, the usual reason is input tax credit (ITC). When insurance became exempt, insurers lost the ability to claim credit on the GST they themselves pay on expenses, commissions, technology, rent, claims servicing. That embedded cost pushed some insurers to raise base premiums modestly, so the net saving to you is typically meaningful but can be somewhat less than the full 18% depending on the product and insurer. Add ordinary age-band changes and medical-inflation-linked repricing on health policies, and a renewal can even rise year-on-year despite the exemption, the exemption still made it cheaper than it would otherwise have been.
The right comparison at renewal is therefore not "did my premium fall 18%?" but "is GST now shown as zero on my premium receipt, and is the base premium competitive against the market?"
What to Check at Your Next Renewal
- Read the tax line on the renewal notice. Individual policies should show zero GST. If you are still being charged 18% on an individual policy, query it with the insurer immediately.
- Compare the base premium, not just the total. With GST out of the picture, differences between insurers are now pure pricing and underwriting, easier to compare than before.
- Reassess your sum insured. The GST saving is a natural budget to upgrade cover; the amount you were paying last year now buys roughly 15–18% more base premium.
- Do not let a policy lapse over a pricing dispute, waiting periods and accrued benefits are worth more than a billing argument. Renew, then contest.
- 80D still applies (old regime): health premiums remain deductible up to ₹25,000 for self and family plus ₹50,000 for senior citizen parents, unchanged by the GST reform.
If You Have Been Postponing Buying Cover
The exemption permanently lowered the cost of individual protection: a term plan quoted at ₹12,000 plus ₹2,160 GST in mid-2025 now bills without that tax line, and the same is true of a family floater health plan. Combined with IRDAI's policyholder-friendly rule changes, shorter pre-existing disease waiting periods and no age-based denial (see our summary of the current IRDAI health insurance rules), the case for closing a protection gap is stronger than it has been in years. Premiums rise with every birthday; the tax on them, at least, is gone.
Frequently Asked Questions
Is there GST on health insurance and term insurance premiums now?
No, not on individual policies. Since 22 September 2025, all individual life insurance and individual health insurance premiums, including term plans, endowment, ULIPs, family floaters and senior citizen plans, are exempt from GST, which was previously charged at 18%. Group policies, such as employer group health cover, still attract 18% GST.
My policy was bought before September 2025. Do my renewals get the GST exemption?
Yes. The exemption applies based on the date the premium is paid, not when the policy was issued. Any premium paid on or after 22 September 2025 is GST-free, so renewals of older individual policies are exempt too.
Why did my premium not fall by the full 18%?
Because insurers lost input tax credit on their own costs when the output became exempt, some adjusted base premiums upward to absorb that embedded cost, so the net customer saving can be somewhat less than 18% depending on the product. Age-band changes and medical-inflation repricing on health policies also affect renewals independently of GST.
Does the GST exemption apply to employer group health insurance?
No. Group life and group health policies continue to attract 18% GST, which is typically borne by the employer. The exemption covers individual policies only, which strengthens the case for holding a personal health policy alongside employer cover.
Can I still claim a tax deduction for health insurance premiums under Section 80D?
Yes, if you file under the old tax regime. The 80D deduction, up to 25,000 rupees for self and family and 50,000 rupees for senior citizen parents, is unchanged by the GST reform. Under the default new regime, 80D is not available, but the GST exemption benefits you either way because it lowers the premium itself.
Want your policies reviewed under the new GST-free pricing?
Our advisors compare your current premiums against 15+ insurers and flag anything you are overpaying. Free, no obligation.
Finvastra is a financial advisory firm based in Hyderabad, Telangana. We advise individuals and businesses on home loans, business loans, loan against property, MSME financing, wealth management, and insurance, working as the client's representative, not as an agent of any lender. We have facilitated over ₹2,000 crore in financing across Hyderabad and Telangana.