The Goods and Services Tax (GST) Council has made a big announcement. The 18 percent GST on life insurance and health insurance premiums will now be removed. This rule will start from 22 September 2025. GST on re-insurance cost is also removed, which will reduce pressure on the insurance industry.
Even though this system will start from 22 September, insurance companies and online platforms are already giving relief to customers. People can buy insurance policies now without paying GST, but the coverage will begin from 22 September.
Experts Welcome the Reform
Anand Roy, MD and CEO of Star Health and Allied Insurance, said this reform will make insurance easier and more affordable for crores of Indians. He said that customers can buy policies without GST now, and their coverage will start from September 22.
Sarbvir Singh, Joint Group CEO of Policybazaar (PB Fintech), also welcomed this move. He said the government’s decision to cut GST on health and term insurance premiums from 18% to 0% is a good step. He added that they, along with the industry, made sure customers can get the benefit right away.
Challenges for the Industry
Even with this relief, some issues remain. The Life Insurance Council plans to seek support from IRDAI and then approach the government. They want this change to apply only to new policies, not old ones. They also ask for input tax credit (ITC) on renewal premiums. Insurance companies also point out that re-insurance is exempted, but commission expenses are still taxable.