Insurance just got cheaper: GST exempted from September 22 | Fusion - WeRIndia

In a major relief for households, the GST Council has announced a complete exemption of GST on all individual life and health insurance policies.

This change, effective from September 22, 2025, will significantly reduce upfront insurance costs for millions of Indians.

Currently, an 18% GST applies to premiums. From the effective date, policies like term insurance, ULIPs, endowment plans, and individual health insurance (including family floater and senior citizen plans) will carry 0% GST.

Example: A policy with a ₹20,000 premium now costs ₹23,600. After the exemption, you pay only ₹20,000, a direct saving of ₹3,600.

The exemption covers individual policyholders only. Group insurance policies are not included as of now.

Reinsurance linked to individual policies is also exempt. Always check your policy category before purchase or renewal.

If your policy renews on or after Sept 22, 2025, you’ll benefit from the GST relief.

Multi-year or mid-term plans may need specific clarification from your insurer or CBIC notifications.

What you should watch for:

• Sum insured: Account for rising healthcare inflation.
• Room rent/sub-limits: Avoid restrictive plans.
• Waiting periods: Check coverage timelines for illnesses.
• Network hospitals: Prefer wide, cashless networks.
• Claim support: Fast, digital claim processing is key.
• Riders: Choose useful add-ons like critical illness or zero-deduction.
• Insurer track record: Check claim ratios and complaint resolution.
• Life insurance type: Term plans offer the best value; compare others carefully.

As GST becomes zero-rated, insurers lose input tax credit (ITC) on business costs. Over time, this may lead to product re-pricing or trimmed features.

Consumers should compare features per rupee and stay alert to policy changes.

Lower premiums help avoid under-insurance. You can opt for larger coverage, more riders, or simply save the difference.

Combine this with existing Section 80C/80D tax deductions for better financial efficiency.

From September 22, 2025, insurance becomes more affordable. It’s a great time to buy, upgrade, or review your cover.

Image by Insurance Experts from Pxhere (Free for commercial use / CC0 Public Domain)

Image Published on April 05, 2024

Image Reference: https://pxhere.com/en/photo/1686576