Life and health insurance have been excluded from the scope of GST. This rule came into effect today, September 22nd. Now the biggest question is whether this rule will apply to everyone, or whether some people have been excluded from this benefit. Let’s try to understand.
The GST Council’s decision to reduce the tax on life and health insurance premiums to zero has come into effect today, September 22, 2025. Calling it a “Diwali gift,” the government has reduced GST (Goods and Services Tax) rates on most products and services, including life and health insurance policies. Insurance policies previously attracted 18% GST, and from today, they are tax-free.
This move will directly impact millions of insurance customers. But every policyholder has one question: will everyone benefit from this? The answer is no. Some policies will still not benefit from this exemption. Let’s understand why.
When will existing policyholders get the benefit?
If you already have a policy, this discount will only apply to future premiums. This means that the 18% GST discount will only apply if you pay your next premium after September 22nd. However, no benefit will apply to old or previously paid premiums.
Will the policy terms change?
No. The removal of GST will not change the terms, conditions, or benefits of your policy. The only difference is that you will have to pay a lower premium. Have you already paid 3 years’ premium in advance, including GST? Will you get the benefit then? If you have paid 2 or 3 years’ premium in advance, there’s some disappointing news for you. According to the FAQs posted on SBI General Insurance’s website, GST paid on advance premium will not be refunded. This means that if you have already paid 3 years’ premium and GST has been levied on it, you will not get a refund.
What do experts have to say about the reduction in GST rates?
Balachander Sekhar, co-founder and CEO of ReNewBuy, says in an FE report that with GST being reduced to zero, the GST exemption on all personal life and health insurance will reduce costs for families, especially senior citizens, making insurance more affordable and accessible. Similarly, the removal of GST on all personal life insurance policies—including term life, ULIP, or endowment policies—
will increase insurance access, especially among first-time buyers and middle-income families, and help the country move towards universal insurance by 2047. The GST exemption is certainly a historic and progressive step. It will make insurance more affordable and accessible to the common man in the future. But remember—there will be no refund on old premiums or advance payments. This means that the real relief will begin with upcoming premiums.
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Get health or term insurance! Now GST-free… A premium of ₹30,000 will save you ₹5,400.
