GST Reforms & Insurance – Customer Q&A

*GST Reforms & Insurance – Customer Q&A*

❓ *1. Has GST been removed on Health and Life Insurance premiums?*

✅ Yes. From September 22, 2025, GST on individual health and life insurance premiums has been reduced from 18% to 0% (NIL).

❓ *2. Does this apply to both new and renewal policies?*

✅ Yes. The exemption applies to all new policies and renewals payable on or after September 22, 2025.

❓ *3. What about premiums already paid before September 22?*

✅ If you paid premiums (including GST) before September 22, there will be no refund. The benefit begins only after that date.

❓ *4. Do grace period renewals qualify for GST exemption?*

✅ No. Payments during the grace period before September 22 will not qualify. Only premiums due on or after September 22 are GST-free.

❓ *5. How much can I save because of GST removal?*

✅ Customers save up to 18% on premiums. Example: Earlier, a policy renewal of ₹1,18,000 will now cost only ₹1,00,000.

❓ *6. Does this reform cover all types of policies?*

✅ Yes. It covers individual health policies, life policies (Term, ULIP, Endowment), and family floater/senior citizen plans. Reinsurance for such policies is also exempt.

❓ *7. Will insurers reduce premiums immediately?*

✅ The GST component will automatically be removed. The base premium remains the same, but the total payable amount will reduce.

❓ *8. Does the exemption also apply to group insurance?*

✅ At present, the GST Council's decision specifically mentions individual health and life insurance. Group products may not enjoy the same benefit.

❓ *9. What does this mean for the general public?*

✅ Insurance becomes more affordable, increasing coverage for middle-class families. Overall healthcare costs will reduce, offering a double benefit.

❓ *10. Do policy terms and conditions change due to GST reform?*

✅ No. Only the total premium payable changes. Policy terms, coverage, and benefits remain unchanged.

❓ *11. Are top-up and super top-up health plans covered?*

✅ Yes. Since they are individual health products, they also fall under 0% GST from September 22, 2025.

❓ *12. What about premiums paid via EMI or monthly mode?*

✅ The GST exemption applies to all payment modes—annual, semi-annual, quarterly, or monthly—as long as the due date is on/after September 22.

❓ *13. Does GST removal affect tax benefits on insurance?*

✅ No. Tax benefits under Section 80C (Life) and 80D (Health) remain unchanged. Customers now enjoy double benefits—lower premiums + tax savings.

❓ *14. Will GST reforms reduce claim settlement hassles?*

✅ Indirectly, yes. With IRDAI and the Finance Ministry tightening NHCX (Claims Exchange), consumers can expect smoother and more transparent claim processing.

❓ *15. Will NRIs with Indian insurance policies benefit from GST removal?*

✅ Yes. NRIs purchasing health or life policies in India will also pay premiums without GST.

❓ *16. Can premiums still increase in the future despite GST removal?*

✅ Base premiums may rise due to medical inflation or mortality risk, but the 18% GST burden is permanently removed.

❓ *17. Does GST exemption also apply to riders (like critical illness and accident coverage)?*

✅ Yes. Since riders are attached to individual life/health policies, they too fall under 0% GST from September 22, 2025.

❓ *18. What about group health insurance from employers?*

✅ Group corporate insurance is not included. The exemption mainly applies to retail/individual policies.

❓ *19. Will existing ECS/auto-debit instructions automatically adjust premiums?*

✅ Yes. After September 22, insurers will auto-update billing and only deduct the revised premium (without GST).

❓ *20. How will customers know if insurers passed on GST benefits?*

✅ IRDAI has instructed insurers to clearly show GST = 0% on premium receipts/invoices.

❓ *21. Does GST exemption make insurance cheaper than mutual funds or deposits?*

✅ Yes. With 0% GST + tax benefits (80C/80D), insurance becomes one of the most cost-effective financial products.

❓ *22. Does loss of Input Tax Credit (ITC) affect how much benefit insurers can pass on?*

✅ Yes. Insurers can no longer claim ITC on operational expenses, so the 18% savings may not be fully passed on, only partially.

❓ *23. What is the actual expected benefit for policyholders after accounting for ITC loss?*

✅ Industry estimates suggest a net benefit of 3%–8%, depending on the insurer's retail business volume.

❓ *24. Will employer-provided group health insurance benefit from GST removal?*

✅ No. The exemption applies only to individual policies; group policies will continue to attract 18% GST.

❓ *25. Can employers shift from group cover to individual allowances due to GST differences?*

✅ Yes. Experts expect a strategic shift where employers may provide allowances or reimbursements for individual policies, which are now tax-free.

❓ *26. Will this reform push insurers to promote individual health plans more aggressively?*

✅ Definitely. Since retail plans are cheaper now and group plans are still taxed, insurers may focus more on individual coverage.

❓ *27. How will this reform impact insurance penetration in India?*

✅ It is expected to increase health insurance adoption, especially among the uninsured "missing middle class."

❓ *28. Does it apply to all types of health insurance—family floaters, senior citizen plans, top-ups, etc.?*

✅ Yes. All individual health products—including floaters, senior citizen plans, riders, and top-ups—fall under the exemption.

❓ *28. Are there official notices/FAQs to refer for implementation details?*

✅ Yes. CBIC and PIB will release official notifications and FAQs clarifying rules for renewals, multi-year policies, and billing protocols.

❓ *29. When will we see official implementation notices?*

✅ The changes take effect from September 22, 2025, and official notifications are expected soon thereafter.

❓ *30. Can health insurance premiums still rise in the future despite 0% GST?*

✅ Yes, they may rise due to factors like medical cost inflation, but the GST component will be permanently removed.