HomeNewsOpinionFull GST exemption on life and health insurance policies will be a mixed blessing

Full GST exemption on life and health insurance policies will be a mixed blessing

If the GST Council opts to exempt individual life and health policies from tax, insurers are likely to lose the benefit of input tax credit. Without ITC, potential benefits of a GST exemption are likely to capped while complicating operational matters for companies

August 28, 2025 / 13:40 IST
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Healthcare, Medical,
With the proposal of exempting life and health insurance policies, the said credits will no longer be available, unless any exemption is carved out for insurers.

By Shivam Mehta and Tanya Garg 

After multiple rounds of pause, deliberations and delays, the rate rationalisation for insurance sector is finally set to see the light in the upcoming GST council meeting as a part of broader GST 2.0 reforms, which are aimed at simplifying tax slabs and reducing consumer burden.

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The proposal and its impact on consumers

Currently, the life and health insurance premium attract 18% GST rate, which contributes significantly to the premium cost.