Govt Removes GST on Insurance Premiums, But Consumers Say They Aren’t Getting the Benefit

New Delhi:
Under the GST 2.0 framework, the government has abolished the 18% Goods and Services Tax (GST) on all personal life and health insurance premiums. The reform, effective from 22 September 2025, aims to make insurance more affordable and accessible for the public—particularly first-time buyers and middle-class families.

However, a new survey indicates that many consumers are not receiving the intended benefit. Several policyholders reported that they were still charged GST while purchasing or renewing their policies.

18% GST Still Applicable on Group Insurance

While personal policies are now exempt from GST, group insurance schemes—such as employer-provided health coverage—continue to attract the 18% tax.
The GST exemption is specifically designed to encourage wider adoption of personal health and life insurance across the country.

Majority of Customers Say They Did Not Get GST Relief

Despite the government’s decision, thousands of consumers have raised concerns on LocalCircles and various social media platforms. Many say that insurers have either continued charging GST or increased the base price of policies, negating the benefit.

A survey of 18,706 respondents revealed the following:

• 39% said their insurer passed on the full GST benefit.
• 18% said they received no benefit and were still charged 18% GST.
• 18% reported that insurers increased the base premium along with the annual hike, cancelling out the GST relief.
• 7% claimed they received partial benefit, but base prices were raised slightly.
• 18% had no response or were unsure.

Overall, 43% of respondents said they did not receive the GST exemption benefit when buying or renewing their personal life or health insurance policies after 22 September 2025.