GST Reforms 2025: Zero GST on Individual Life Insurance Premiums – What It Means for You

On September 3, 2025, the GST Council announced a landmark change: the GST exemption on individual life insurance and health insurance. From September 22, 2025, all individual life and health insurance premiums will be GST-free.

This means your term insurance, ULIPs, and health insurance premiums are up to 18% cheaper, making financial protection more accessible for millions of Indians.

GST Reforms 2025: What Changed for Insurance?

Until now, policyholders paid up to 18% GST on Individual term and health insurance premiums, and ULIPs (On Charges Component).

That extra cost often discouraged families from buying protection.

With the GST reforms 2025, the tax has been removed — creating GST-free Individual Life insurance policies for the first time.

GST on Term Insurance Premiums in 2025: How Much Do You Save?

Here’s a breakdown of before vs after savings under the new GST rules:

👉 In simple terms: The GST exemption on life insurance means you save up to 18% instantly on every premium.

Why Zero GST on Insurance Matters

For Customers

• Cheaper premiums – up to 18% direct savings across policies.
• Lower entry barriers – Families on tight budgets can now afford coverage.
• Boost for long-term products – ULIPs look more attractive without GST deductions.

For the Industry

• Higher insurance penetration in India – More households will buy protection.
• Simpler sales conversations – Advisors can pitch GST-free policies with clarity.
• Ease of compliance – No GST paperwork in premium communication.

When Does the GST Exemption on Life Insurance Start?

The new rule takes effect on September 22, 2025.

This means that any eligible individual life or health insurance policy purchased or renewed on or after this date will be GST-free. Policies purchased before this date will still be subject to applicable GST until renewal.

Conclusion

The GST Reforms 2025 mark a significant step toward making individual life and health insurance more affordable and accessible in India. By eliminating the 18% tax on premiums, the government has reduced financial barriers and simplified the process for individuals seeking protection.

For new buyers, the reform presents an opportunity to enter the insurance ecosystem with reduced costs. For the industry, it aligns with long-term goals of expanding insurance coverage and deepening financial inclusion.

FAQs on GST and Life Insurance

Q1. What is the GST exemption on life insurance announced in 2025?

The GST reforms 2025 exempt all individual life insurance and health insurance policies from GST starting Sept 22, 2025.

Q2. Is GST applicable on term insurance premiums in 2025?

No. From Sept 22, 2025, GST on Individual term insurance premiums will be exempted.

Q3. What is the GST rate on health insurance now?

The GST rate on health insurance is exempted starting Sept 22, 2025.

Q4. Will ULIPs become cheaper after GST reforms?

Yes, ULIP policies will no longer attract 18% GST, saving policyholders thousands of rupees annually.

Q5. How much will I save after GST reform?

On average, policyholders save 18% on premiums compared to earlier.

Q6. Should I wait till Sept 22 to buy insurance?

Yes, premiums will be cheaper after Sept 22. However, completing KYC and medicals now helps you lock in your health and age benefits, ensuring you don’t risk higher premiums later.