From 22 September 2025, individual health insurance and individual life insurance premiums in India are GST-exempt - no GST is payable on the premium. Group, corporate, and employer policies, and personal motor (car and two-wheeler) insurance, still attract 18% GST. This is a tax-exemption explainer, not tax advice; confirm your own policy with your insurer or a qualified professional.
Quick Facts: GST on insurance (as of September 2025)
| Insurance type | GST from 22 Sep 2025 | Before the reform |
|---|---|---|
| Individual health (incl. family floater, senior-citizen) | Exempt - no GST payable | 18% |
| Individual life - term | Exempt - no GST payable | 18% on premium |
| Individual life - ULIP | Exempt - no GST payable | 18% on charges |
| Individual life - endowment / whole-life / money-back | Exempt - no GST payable | Effective ~4.5% year 1 / ~2.25% on renewals |
| Reinsurance of the above individual policies | Exempt - no GST payable | 18% |
| Group / corporate / employer health or life | 18% | 18% (unchanged) |
| Personal motor (car, two-wheeler): own-damage + comprehensive | 18% | 18% (unchanged) |
| Third-party insurance of goods-carriage vehicles | 5% with input tax credit | 12% with input tax credit |
Every rate above is the position as of September 2025, set by the 56th GST Council and given effect by CBIC notifications from 22 September 2025. GST rates can change at a future Council meeting, so treat this as a dated snapshot.
What changed in GST 2.0 (September 2025)
The 56th GST Council met on 3 September 2025, and CBIC notified the changes with effect from 22 September 2025. For insurance, the headline change is that all individual life and individual health insurance premiums moved from 18% to exempt. The key word is exempt, not zero-rated - and the difference matters. An exempt supply carries no output GST and, importantly, no input tax credit (ITC) for the insurer. A zero-rated supply (which is what exports get) would have been taxed at 0% while still letting the insurer reclaim ITC. Insurance got the exemption, not zero-rating, which is why insurers now lose ITC on their own costs - the point that drives the premium question further down.
For a normal renewal, the rate follows the date of premium payment - a premium paid on or after 22 September 2025 is exempt even if the due date fell a little earlier. For an advance or prepaid premium, the exact cut-off follows the GST time-of-supply rule for a change in rate of tax (CGST Section 14), which looks at when the supply, the invoice, and the payment each fall.
What is now GST-exempt
The exemption covers individual policies only, and within that it is broad:
- Individual health insurance - including family floater plans and senior-citizen health plans.
- Individual life insurance - including term plans, unit-linked plans (ULIPs), and endowment, whole-life, and money-back policies.
- Reinsurance of these individual life and health policies.
On these, there is simply no GST to add: the premium you are quoted is the premium you pay, with no 18% on top. Before 22 September 2025 the same policies were taxed at 18% (for health and term life), or at an effective 4.5% in the first year and 2.25% on renewals for traditional savings plans such as endowment, whole-life, and money-back. Those legacy rates are now history for individual cover - the whole category is exempt.
What still attracts 18% GST
The exemption is specific to individual life and health cover. These are not exempt and continue at 18%:
- Group, corporate, and employer-provided health or life insurance. If your only cover is a workplace group policy, you do not get the GST relief on it.
- Personal motor insurance - car and two-wheeler - covering own-damage, comprehensive, and most add-ons.
One narrow exception sits outside the 18% line: third-party insurance of goods-carriage vehicles was reduced from 12% to 5% (with input tax credit) from 22 September 2025. That is a commercial-transport edge case, not personal car or bike cover.
Will my premium actually fall 18%?
Not necessarily, and this is the part that "you save 18%" headlines get wrong. Because individual life and health insurance is now exempt rather than zero-rated, insurers can no longer claim input tax credit on their own taxable costs - commissions, rent, IT systems, and the like. That blocked ITC becomes a cost to the insurer. To offset it, some insurers may raise base premiums slightly from the next cycle, so the net amount you save can be smaller than the full 18% that was removed. The accurate way to read it: your individual health or life premium is now GST-exempt, so no GST is charged - but check your renewal notice for the actual rupee change rather than assuming a flat 18% drop.
GST on car insurance: how to work it out
Personal motor insurance still carries 18% GST, so here the arithmetic still matters. If your car insurance base premium is Rs 12,000, the GST is 18% of that - Rs 2,160 - making the total payable Rs 14,160. Working backwards from a GST-inclusive figure, divide the total by 1.18 to get the base: a Rs 14,160 inclusive premium is Rs 12,000 of cover plus Rs 2,160 of GST. The same 18% applies to two-wheeler insurance.
🧾Does this change my 80C or 80D deduction?
The GST exemption does not, by itself, change income-tax deductibility - but those deductions carry their own conditions, and they apply only under the old tax regime:
- Health premium (Section 80D): deductible under the old regime up to Rs 25,000 (Rs 50,000 where the insured is a senior citizen), and not for premiums paid in cash. The new regime does not allow it.
- Life premium (Section 80C): deductible under the old regime within the overall Rs 1.5 lakh 80C ceiling, subject to policy-eligibility conditions (such as the premium not exceeding a set share of the sum assured). The new regime does not allow it.
So a GST-exempt premium is still eligible for the same 80C or 80D deduction it was before, if you are on the old regime and meet the conditions. The GST change and the income-tax deduction are two separate things.
Sources
- PIB, Recommendations of the 56th Meeting of the GST Council (3 September 2025): pib.gov.in
- PIB, FAQs on the decisions of the 56th GST Council - exemption scope and the input-tax-credit clarification (an exemption, not a zero-rating): pib.gov.in
- Ministry of Finance, Department of Financial Services - "Exemption of GST on all Individual Life Insurance and Health Insurance Policies": financialservices.gov.in/beta/en/exemption-on-gst
- CBIC rate notifications giving effect to the GST 2.0 changes from 22 September 2025: cbic.gov.in