Life insurance and health insurance premiums are now exempt from GST after September 22, 2025. The 18% GST that used to add thousands to your annual premium is gone. Here is everything you need to know.
If you pay for health insurance or life insurance in India, September 22, 2025 was a very good day for your finances. Under GST 2.0, the government moved both life insurance and health insurance premiums from 18% GST to 0% GST — completely tax-free. This single change saves every insured Indian thousands of rupees annually.
Before GST 2.0, a health insurance premium of Rs 25,000 per year included Rs 4,500 in GST (18% on Rs 25,000 / 1.18 = Rs 21,186 base + Rs 3,814 GST, or alternatively 18% added on top of the base premium depending on how your insurer structured it). After the reform, the entire Rs 25,000 goes toward your insurance coverage — zero GST component.
This was the most demanded change in the GST 2.0 consultation process. Lakhs of taxpayers had petitioned the government to remove GST on health insurance, arguing that taxing a health safety net was regressive. The 56th GST Council agreed, and the exemption came into force along with all other GST 2.0 changes.
In this guide, we cover exactly which insurance policies are now at 0% GST, which ones still attract GST, how to verify your insurer has updated their billing, and what this means if you are an insurance agent or financial advisor. Use our GST calculator to calculate the savings on any premium amount.
The GST exemption under GST 2.0 applies to the following categories of insurance:
Term life insurance: Pure term plans — where the policyholder pays a premium for a defined period and the insurer pays the sum assured only on death — are now fully exempt from GST. SAC code 997131 covers life insurance services. A term plan premium of Rs 15,000 per year previously had Rs 2,700 in GST; now it is zero.
Whole life insurance: Policies that provide coverage for the entire life of the insured also qualify for the exemption. The premium for whole life plans is now at 0% GST.
Endowment plans: These are combination plans that include both life cover and a savings component. The GST exemption applies to the entire premium — both the insurance and investment portion are treated as a single insurance service and attract 0% GST.
ULIPs (Unit Linked Insurance Plans): Unit Linked Insurance Plans are at 0% GST on the insurance premium component. However, fund management charges within ULIPs may still attract 18% GST as a financial service — consult your insurer's updated premium breakdown to understand the exact allocation.
Health insurance (mediclaim policies): Individual health insurance, family floater plans, and group health insurance policies are all at 0% GST. HSN SAC 997133 covers health insurance services. This is the biggest consumer win — health insurance premiums tend to be higher and GST savings are proportionally larger.
Critical illness and accident cover: Stand-alone critical illness policies and personal accident policies that are classified as health insurance products qualify for the 0% rate.
Before (18% GST) vs After (0% GST) — savings per policy per year
| Feature | Annual Premium | Old GST at 18% | New GST at 0% | Annual Savings |
|---|---|---|---|---|
| Rs 10,000 health policy | Rs 1,800 | Rs 0 | Rs 1,800 saved | |
| Rs 15,000 term plan | Rs 2,700 | Rs 0 | Rs 2,700 saved | |
| Rs 25,000 health policy | Rs 4,500 | Rs 0 | Rs 4,500 saved | |
| Rs 30,000 family floater | Rs 5,400 | Rs 0 | Rs 5,400 saved | |
| Rs 50,000 senior citizen plan | Rs 9,000 | Rs 0 | Rs 9,000 saved | |
| Rs 75,000 group health cover | Rs 13,500 | Rs 0 | Rs 13,500 saved | |
| Rs 1,00,000 high-value term plan | Rs 18,000 | Rs 0 | Rs 18,000 saved |
Not all insurance is at 0% GST after GST 2.0. The exemption specifically covers life insurance and health insurance. These categories still attract 18% GST:
Motor insurance (vehicle insurance): Third-party motor insurance and comprehensive motor insurance policies continue at 18% GST under SAC 997137. This applies to two-wheelers, cars, commercial vehicles, and all other motor vehicles.
Fire and property insurance: Fire insurance, burglary insurance, and property insurance for commercial establishments remain at 18% GST (SAC 997134). Home structure insurance for individuals is also at 18%.
Marine insurance: Cargo insurance, marine hull insurance, and other maritime policies are at 18% GST (SAC 997135).
Travel insurance: Domestic and international travel insurance policies remain at 18% GST.
Crop insurance (commercial, non-PMFBY): Government-sponsored crop insurance schemes like PMFBY are exempt. However, commercial crop insurance products sold by private insurers outside government schemes attract 18% GST.
Financial guarantee insurance: Credit guarantee insurance, surety bonds, and other financial risk products are at 18% GST.
The practical takeaway: if the insurance protects your life or your body, it is now at 0% GST. If it protects a vehicle, building, cargo, or financial risk, it is still at 18%.
Many policyholders renewed their health or life insurance policies after September 22, 2025, only to find their insurer's invoice still showing 18% GST. This happened due to system update delays. Here is how to verify and what to do:
Check your renewal notice: The premium breakup in your renewal notice should show GST at 0% or simply not include a GST line for health and life policies. If the notice shows 18% GST on a health or life premium for renewal dates from September 22, 2025 onwards, contact your insurer.
Download the GST invoice from the insurer portal: Most insurers issue a GST invoice (or a premium receipt with GST details) in their customer portal. Log in and download the latest invoice. It should show SAC code 997131 (life) or 997133 (health) with 0% GST rate.
What to do if your insurer is still charging 18% GST: Write to your insurer's grievance redressal officer citing the CBIC notification effective September 22, 2025. Insurers are obligated to issue a revised invoice and credit note for the GST component. IRDAI circular from October 2025 also directed all insurers to update their systems within 30 days of GST 2.0 taking effect.
For insurance agents and brokers: Your commission income is a service you provide to insurers — it remains at 18% GST (SAC 997152). The 0% exemption applies to the insurance premium that the insured pays to the insurer, not to your brokerage fee. If you use myBillPlease to invoice insurers for your commission, keep the GST rate at 18% for agency/brokerage services.
We work with thousands of small businesses through myBillPlease, and many of them offer group health insurance to their employees. The GST 2.0 change on insurance has a specific implication for employer-provided group health cover.
Group health insurance premiums are exempt: Employers who pay group mediclaim premiums for employees benefit from the same 0% GST exemption. A company paying Rs 5,000 per employee per month for group health cover (Rs 60,000 per employee per year) previously had Rs 10,800 in GST per employee annually — now that is zero. For a company with 20 employees, that is Rs 2,16,000 in annual savings.
Input tax credit implications: Under the old 18% regime, businesses could claim input tax credit on group health insurance premiums subject to certain conditions (it was a restricted ITC item under Section 17(5) of the CGST Act). With the premium now at 0% GST, there is no GST to claim as ITC. However, this is more than offset by the actual savings on the premium cost itself.
Employee benefits accounting: If your company tracks employee benefit costs, update your accounting to remove the GST component from health insurance expense calculations. The premium amount stays the same (or increases by inflation), but the GST element is now zero — so the total cost per employee decreases.
The GST exemption on health insurance combines with the existing Section 80D income tax deduction to create a genuinely powerful saving for individuals:
Section 80D deduction: Individuals can claim up to Rs 25,000 deduction on health insurance premiums under Section 80D (Rs 50,000 if the insured is a senior citizen). This deduction is based on the premium paid — since there is no longer GST embedded in the premium, the deduction calculation is simpler and the entire premium qualifies.
Example — Rs 25,000 health policy: Before GST 2.0: You paid Rs 25,000 premium (which included Rs 3,814 GST on base premium of Rs 21,186). After GST 2.0: You pay Rs 25,000 pure premium — full Rs 25,000 qualifies for Section 80D deduction. The insurer can now also provide more coverage for the same Rs 25,000 since no portion goes to GST.
Use our free GST calculator to see exact savings on your premium. Enter your current premium amount, and compare 18% (old) versus 0% (new) to see the annual difference.
myBillPlease automatically applies the correct GST rate for every product and service, including 0% for exempt items. No manual lookups needed.
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