The Goods and Services Tax (GST) on health and insurance products for individuals has been cut to zero from the existing 18%. The government and the insurance industry hopes that this improved affordability of essential insurance covers will encourage more people to purchase health insurance policies.
Indian finance minister Ms Nirmala Sitharaman announced this major decision in a late-night press conference on 3 September 2025. She said the decision of the GST Council has been taken with full consensus and all ministers supported rate rationalisation. The changes in GST rates will be implemented with effect from 22nd September 2025.
Speaking with Asia Insurance Review Bajaj Allianz General Insurance MD and CEO Tapan Singhel said, The GST Council’s decision to bring health insurance under the NIL GST bracket 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,” said Mr Singhel.
Insurance Brokers Association of India president Narendra Bharindwal said, “The exemption of GST on all individual life insurance policies, whether term life, ULIPs, or endowment and on individual health insurance policies, including family floater and senior citizen plans, marks a historic step towards universal insurance inclusion. This will ensure greater penetration of life and health insurance, supporting India’s vision of “Insurance for All by 2047.
“This will provide significant relief to senior citizens, for whom health insurance is a critical necessity in the later stages of life,” said Mr Bharindwal.
Pramerica Life Insurance MD and CEO Pankaj Gupta said, “By reducing costs for products such as term life and health insurance, this move makes essential protection more accessible to a wider section of society.
He said, "It enables customers to either come under the insurance fold for the first time or enhance their coverage within the same budget — a meaningful advantage in a country where underinsurance remains a concern. On the investment side, unit-linked products are expected to deliver even better long-term efficiencies. These savings can be reinvested by policyholders, strengthening their financial security further, in a tax advantaged manner."
India First Life Insurance MD and CEO Rushabh Gandhi said, “Despite short-term margin pressure on the industry's profitability because of the classification under the ‘exempt’ category, we believe the expected growth in premiums will strengthen the industry in the medium term and support sustainable expansion.
Mr Gandhi said, “The GST Council’s recommendation is a progressive step that will accelerate insurance penetration in India.”
Manipal Cigna Health Insurance MD and CEO Joydeep Saha said, “This much-awaited reform will help millions of households safeguard themselves against unforeseen medical expenses without worrying about affordability. The reform will not only benefit existing customers but also empower more families to opt for health insurance coverage.”