In particular, the Life Insurance Council had recommended to reduce the GST rate on policies to zero with an equal reduction in tax rates for reinsurance and committees also to prevent anomalies for anomalies.
The exemption from goods and service tax (GST) about individual life and health insurance policies will encourage the policyholders a little through premium reduction, although the insurers still have to work out its exact nature.
However, the operational costs of the insurers will probably increase, depending on the availability of input tax credit (ITC) at certain costs. Insurers are waiting for clarity. In the case of non-availability of ITC, insurance companies can prefer any trouble with customers who can compensate for the profit of removal of 18 percent GST on the premium.
Despite some challenges in the implementation, the insurers are unanimous in welcome the move. “The removal of GST on individual life insurance products is a step towards life insurance for everyone more affordable to achieve the goal of the insurance for everyone by 2047,” said Roraiswamy, CEO & MD, Life Insurance Corporation said.
According to Rushabh Gandhi, MD & CEO, Indiafirl Life Insurance, the relocation will expand the life insurance market. “With input tax credit that is not available for certain costs, the margins will be affected. That has said, this is a transitional adjustment and the long-term advantage of a stronger acceptance of customers is heavier than the challenges in the short term,” Gandhi B saidUsiness line.
HDFC Life has informed BSE that it would expect that a non-material (less than 0.5 percent) would expect an impact on its embedded value. “We will continue to work on our aim to double our value of new companies for more than 4 to 4.5 years,” said it.
In particular, the Life Insurance Council had recommended to reduce the GST rate on policies to zero with an equal reduction in tax rates for reinsurance and committees also to prevent deviations in claims for anomalies.
In FY25, the new business premium of the Life Insurance industry was £ 3.97 Lakh Crore, in which a growth of 5.13 percent was placed on an annual basis, according to the data of the Life Insurance Council.
Health coverage
The GST exemption of health coverage has been a long-term question from the experts to make health care more affordable and thus offer social and financial security to the ordinary man.
The premiums for health insurance policies are also expected to fall, because the general and stand -alone health insurance policies now have to rework the price of premiums. The insurers are tight on the amount of decrease in the premium, but are almost certain of the difficulties in passing the entire benefit of 18 percent reduced in GST to policyholders and they are analyzing implications.
“Although it is expected that the premiums will lower by reducing taxes, we must not yet understand the size of this reduction, because this also depends on the availability of the input tax credit, which will become more clear in the coming days, ” ” ” ” ”
Invoicing in the medical inflation that increases steeply will “go directly to citizens and relieve the financial burden for families and speed up the penetration of the insurance,” said Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance.
The reforms will also strengthen confidence in insurance as a reliable safety net, Narendra Bharindwal, president of Insurance Brokers Association of India (IBAI).
Health insurance is the largest segment in the non-life sector. The premium grew by 8.98 percent in FY25 at £ 1.18 Lakh Crore.
Published on September 4, 2025
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