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1. Understanding GST on Insurance Policies

Before the reform, India's GST regime taxed most insurance premiums—especially health and life insurance—at 18%, adding a significant cost burden to policyholders The Economic TimesClearTax.

Different insurance products had varied GST rates:

2. Key Reform — Zero GST from September 22, 2025

The GST Council has slashed GST on health and life insurance to 0%, effective September 22, 2025.

  • Applies to new policies and renewals starting on or after this date.
  • Payments made before this date will still attract 18% GST.
  • No refunds for premiums already paid.

3. Should You Delay Premium Payment After September 22?

This is one of the most asked questions by policyholders.

  • If your policy renewal falls on or after September 22, 2025, you automatically benefit from 0% GST.
  • If your premium is due before September 22, delaying payment may risk a policy lapse. Lapsed policies could result in:
    • Loss of coverage during the gap.
    • Higher reinstatement charges.
    • Medical re-evaluation requirements.

Expert Advice: Do not delay payments beyond your due date just to save GST. Instead, plan future renewals and new policies post-September 22 to gain the benefit. (Source: Economic Times)

4. Benefits for Policyholders

  • 18% savings on insurance premiums.
  • Increased affordability, boosting health & life coverage penetration.
  • No extra financial burden on insurers, as ITC loss impact is minor.

5. What Industry Groups Are Asking For

Insurance industry bodies have urged the GST Council to extend the zero-GST treatment to agents’ commissions, currently taxed at 18%, arguing that continued taxation there hurts their bottom line due to loss of ITC

6. Timeline & Effective Date

  • GST on individual health and life insurance dropped to 0% starting September 22, 2025 ReutersNiva BupaClearTax.
  • Change applies only to policies due after this date; advance payments don’t qualify for refunds

FAQs: GST on Insurance

Q1. When will 0% GST on insurance start?
๐Ÿ‘‰ From September 22, 2025.

Q2. Does this apply to all insurance policies?
๐Ÿ‘‰ Only individual health and life insurance policies. Other policies (like motor insurance) may still attract GST.

Q3. Will I get a refund for GST paid before Sept 22?
๐Ÿ‘‰ No, refunds are not applicable.

Q4. Should I delay paying my premium to save GST?
๐Ÿ‘‰ Not advisable. If your due date is before Sept 22, delaying can lapse your policy. If your renewal is on or after Sept 22, you automatically get the benefit.

Q5. What about insurance agents’ commissions?
๐Ÿ‘‰ Currently, commissions still attract 18% GST, though industry bodies are requesting a cut.

Q6. Will I get a GST refund if I already paid my insurance premium in advance?
๐Ÿ‘‰ No. Once you have paid your insurance premium in advance, including GST, no refund of the tax is allowed.

 

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