The government's decision to altogether remove goods and services (GST) tax on health and life insurance premiums has come into effect from 22 September 2025 and is expected to reduce insurance premiums substantially and increase insurance penetration.
The GST council has totally exempted individual life and health insurance premiums from GST, against the 18% GST that was being charged over and above the base premium. The zero GST is expected to rejuvenate the insurance market with affordable products offering better returns and also bring in millions of Indians into the insurance net. The zero GST on health insurance is expected to boost insurance adoption, especially among first-time buyers and underserved populations.
Experts believe that this reduction on life and health insurance GST supports the government's overarching objective of boosting insurance penetration and is a step towards universal health coverage and will enable more Indians to safeguard their financial and health futures.