From September 22, 2025, buying a health or life insurance policy will become cheaper as the government has announced a health insurance GST exemption. The GST Council health insurance decision will apply to all individual insurance plans including term life, ULIP, endowment policies, and reinsurance.

Since 2017, people have been paying 18% GST on insurance premiums. For example, if a policy premium was ₹20,000, the total cost with GST went up to ₹23,600. With the new rule of no GST on health insurance, the same policy will now cost only ₹20,000. This will make insurance more affordable for everyone.

The main aim of this move is to give more people access to insurance and to encourage them to buy policies or increase their coverage. Health policies are often seen as costly, but with the GST health policy 2025 reform, they will now fit better within the common man’s budget.

In 2023-24 alone, the government collected more than ₹8,200 crore through GST on health insurance premiums and about ₹1,484 crore from health reinsurance premiums. However, the new exemption is expected to cause a revenue loss of nearly ₹9,700 crore. Despite this, experts believe the long-term benefits for citizens are far greater as people will be encouraged to secure themselves financially.

This decision was taken during the GST Council meeting chaired by Finance Minister Nirmala Sitharaman. Some ministers also stressed that the tax benefits health insurance must directly reach policyholders and not just help insurance companies.

Overall, the new rule ensures that people buying insurance after September 22 will not have to pay GST, making both life and health insurance easier to afford and boosting financial protection across India.