The 56th GST Council, chaired by Finance Minister Nirmala Sitharaman and comprising finance ministers of all states, on September 3, 2025, decided to exempt the premiums for individual life insurance and health insurance policies, including family floater plans, from goods and services tax (GST).

The exemption will be applicable from September 22, 2025. Currently, the rate applicable to health and life insurance policies is 18%.

“The GST Council’s decision to bring health insurance under the NIL GST bracket is a landmark move that will make healthcare protection more affordable and accessible for millions of Indians. At a time when medical inflation is rising steeply, this step directly benefits citizens and eases the financial burden on families. It is also in complete alignment with the vision of Insurance for All by 2047, enabling more people to secure their health and future. This progressive decision will accelerate insurance penetration and strengthen the nation’s health security,” said Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance.

According to a PIB press release, "Exemption of GST on all individual life insurance policies, whether term life, ULIP or endowment policies and reinsurance thereof to make insurance affordable for the common man and increase the insurance coverage in the country."

"Exemption of GST on all individual health insurance policies (including family floater policies and policies for senior citizens) and reinsurance thereof to make insurance affordable for the common man and increase the insurance coverage in the country," the release said.

All individual health insurance, along with reinsurance thereof, is 18% with input tax credit (ITC) exemption, as noted in the press release.

As a result, the policies will become cheaper; however, it will be challenging for insurers to implement this, as it could impact their input tax credit.

Sarbvir Singh, Joint Group CEO, PB Fintech, said, "We sincerely thank the government for this monumental decision to remove GST from life and health insurance."

Singh said it sends across a clear message that health and life insurance are critical products for the economy and hence, they are now GST exempt. Especially, term insurance is a highly crucial product and this move will positively impact the whole category in an unprecedented way.

"By easing the financial burden at a time when healthcare costs are steadily rising, this decision lowers the entry barrier for millions of Indians to secure their wellbeing and financial future. This move is aimed at promoting financial inclusion, protecting vulnerable households, and creating a culture of long-term security," said Singh.

"It will be remembered as a progressive reform that brings reassurance to countless families, while also ensuring product innovation across the board and energising the insurance industry to reach deeper into the heart of India," adds Singh.