If you have not renewed your health or life insurance since September 2025, your next premium will surprise you — 18% lower. The GST Council exempted individual health and life insurance from GST effective 22 September 2025, ending a near-decade of 18% tax on a product the government wanted Indians to buy more of. Here is exactly what changed, what still attracts GST, and what it means for your wallet.
The change in one paragraph
At the 56th GST Council meeting in September 2025, the Council exempted all individual health insurance policies (including family floater and senior citizen plans) and individual life insurance policies from GST. Reinsurance services for these covers were also exempted. The exemption took effect 22 September 2025 and applies to both new policies and renewals. The previous rate was 18%.
What attracts GST now vs before
| Insurance type | Old rate (pre-22 Sep 2025) | Current rate (2026) |
|---|---|---|
| Individual health (incl. family floater, senior citizen) | 18% | 0% — exempt |
| Individual life — term, endowment, ULIP, whole-life | 18% on protection portion / 1.8% on first-year ULIP investment | 0% on individual policies |
| Group / corporate health insurance | 18% | 18% (unchanged) |
| General insurance (motor, travel, home) | 18% | 18% (unchanged) |
| Reinsurance (individual health + life) | 18% | Exempt (passthrough benefit) |
What it means for your premium
The change is mechanical: a policy that quoted ₹25,000 + ₹4,500 GST = ₹29,500 in 2024 now quotes ₹25,000 flat. That is a real ~15% saving on the cash you pay out, on renewal after 22 September 2025.
Industry data shows the effect: retail health insurance premiums grew 19% year-on-year to ₹48,952 crore by February 2026 — driven by genuine uptake at the more-affordable post-GST price.
Does it apply to renewals?
Yes. The exemption applies to both new individual policies issued from 22 September 2025 and to renewal premiums paid from that date onward. If your renewal fell in October 2025 or later, you received the lower price.
What did NOT change
- Group / corporate health insurance still attracts 18% GST.
- Motor, travel, home and other general insurance still attract 18% GST.
- The premium base price itself still rises with age, claim history and medical inflation — exempt of GST or not.
- For ULIPs, the post-Feb 2021 tax rule on maturity proceeds when annual premium exceeds ₹2.5 lakh is unchanged — see ULIP vs term + mutual fund.
What to do
- Check your last renewal quote. If it was after 22 September 2025 and still shows 18% GST, ask the insurer for the corrected invoice and refund.
- Re-evaluate the cover you can afford. The 15% effective price drop is the equivalent of a free upgrade — consider stepping the sum insured up.
- If you have postponed buying a health or term plan because of cost, the math is now meaningfully better. See the best health insurance roundup and the best term plans roundup.
- For employers, group corporate cover still bears 18% — factor it into your benefit-vs-individual decision.
Frequently asked questions
Is GST applicable on health insurance in 2026?
No, not on individual health insurance — the GST Council exempted individual health (including family floater and senior citizen plans) from GST effective 22 September 2025. Group / corporate health insurance still attracts 18%.
Is GST applicable on term life insurance?
Not on individual life insurance — the same September 2025 exemption applies. Term insurance bought after 22 September 2025 is GST-free at the premium level. ULIP and endowment tax rules on maturity are separate from this premium exemption.
What is the GST rate on insurance now?
0% on individual health and individual life insurance; 18% on group / corporate health, and on motor, travel, home and other general insurance.
Does the GST exemption apply to renewals?
Yes — both new policies and renewals from 22 September 2025 onward are exempt for individual health and life cover.
How much will I save?
Roughly 15% on the cash you pay (the old 18% GST applied on the base premium). A ₹25,000 base premium now costs ₹25,000 flat instead of ₹29,500.
Sources: 56th GST Council meeting decisions (September 2025); CBIC notifications on insurance exemption effective 22 September 2025; insurer renewal-pricing pages; accessed May 2026. The exemption applies to individual health and life insurance — group / corporate and other general insurance are unchanged. Editorial research, not tax or insurance advice.
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