Published 7 October 2026
Until September 2025, a health or life insurance premium carried GST at 18 per cent. On a family health policy, that was a noticeable part of the cost. From 22 September 2025, premiums on individual policies carry no GST at all. Group policies are treated differently. This article sets out what changed, who benefits, and where the line is drawn.
Before: 18 per cent
Insurance is a financial service. Before September 2025, it fell within the general entry for “financial and related services” in Notification No. 11/2017-Central Tax (Rate). That entry carried central tax at 9 per cent, and so 18 per cent in total with State tax.
From 22 September 2025: individual policies exempt
Notification No. 16/2025-Central Tax (Rate) added three entries to the list of exempt services in Notification No. 12/2017-Central Tax (Rate), effective 22 September 2025.
- Life insurance. “Services of life insurance business provided by an insurer to the insured, where the insured is not a group.” Rate: nil.
- Health insurance. “Services of health insurance business provided by an insurer to the insured, where the insured is not a group.” Rate: nil.
- Reinsurance of those two services. Rate: nil.
An Explanation to the first two entries sets the scope. The exemption applies “to a contract of insurance where the insured is an individual, or an individual and family of the said individual”. “Family” includes “all individuals insured as family in the contract of insurance”. A family floater policy is therefore covered, as well as a policy on one person.
What counts as health insurance
The notification defines health insurance business widely, as “contracts which provide for sickness benefits or medical, surgical or hospital expense benefits, whether in-patient or out-patient, travel cover and personal accident cover”. Travel insurance and personal accident cover, bought by an individual, fall within the exemption along with hospitalisation policies.
Group policies remain taxable
The exemption does not cover a policy where the insured is a group, which the notification defines as a “group of persons who join together with a commonality of purpose or for engaging in a common economic activity, other than availing insurance”. The definition covers employer and employee groups, and other groups too.
The most common example is a group health policy that an employer takes out for its staff. It is not exempt, and the premium still carries GST. The same applies to policies taken through an association or other group formed for a purpose other than buying insurance.
What this means for a policyholder
Where an individual or family policy was renewed on or after 22 September 2025, the premium should show no GST. A renewal notice or receipt that still adds GST to an individual or family policy is worth querying with the insurer.
The change is not retrospective. Where a premium was paid, and the policy issued, before 22 September 2025, the GST charged then was due. Where payment, invoice and the period of cover fall on different sides of the date, the rules on time of supply decide. The guide on time of supply explains them.
Income tax deductions for insurance premiums are a separate matter, under the income tax law, and are not affected by this change.
The other changes made on the same date are covered in GST 2.0: what changed on 22 September 2025.