Health and term insurance go GST-free ahead of September 22 rollout

After its 56th meeting on September 4, 2025, the Goods and Services Tax (GST) Council announced an exemption on all health and life insurance premiums as part of the Centre’s indirect tax rationalisation initiative.

Following the government’s decision to exempt health and term insurance premiums from Goods and Services Tax (GST) starting September 22, insurers and intermediaries are not waiting for the September 22 date to begin passing on benefits to customers. Several insurers have come together to ensure that individuals buying policies now can do so without paying GST but their coverage will start from the official rollout date, since underwriting and policy issuance often take time.

Anand Roy, MD and CEO of Star Health and Allied Insurance said, “The GST exemption on health insurance premiums is a landmark reform that will make protection more affordable and accessible for millions of Indians. While the reforms officially take effect from 22nd September, Star Health and intermediaries have come together to innovate and ensure that customers don’t have to wait."

"Starting now, customers can buy their health insurance policies without paying GST, with their coverage beginning from 22nd September. We strongly feel that health insurance is a necessity, not an optional expense. By enabling customers to lock in their protection now well ahead of the reform date we are removing any friction in the buying process and ensuring families remain covered without delay. This collaborative step demonstrates the industry’s commitment to serving customers better and faster," explains Anand.

For families, this effectively means lower premiums on health and term policies at a time when medical costs are steadily rising and financial protection is becoming increasingly essential. The industry’s proactive response ensures that the reform translates into immediate benefits for consumers, rather than being held up by administrative timelines.

Sarbvir Singh, Joint Group CEO of PB Fintech, which operates Policybazaar,  agrees stressing both the necessity of protection and the progressive nature of the reform, “Health and term insurance are necessities, and there is no reason for families to delay their purchase. Since underwriting and policy issuance often take time, customers can now buy their policy today without paying GST, with coverage beginning from 22nd September. This ensures that they take the decision to protect themselves right away while fully benefiting from the government’s reform.”

Industry experts believe the move could help narrow India’s massive protection gap by encouraging more families to secure health and term insurance coverage. With insurers and digital platforms enabling early adoption of GST-free policies, the stage is set for wider penetration and a much-needed boost to financial security across households.