Quick Summary
The Central Government has issued Notification No. 16/2025 - Central Tax (Rate) along with corresponding amendments under Integrated GST (IGST) and Union Territory GST (UTGST), providing GST exemption on life and health insurance services when availed by individuals or families, effective September 22, 2025.
Key Highlights of the Notification
Exemption on Insurance Premiums
- Life insurance services provided by insurers to individuals or families (not groups) are exempted from GST.
- Health insurance services for individuals or families (not groups) are also exempt.
- Reinsurance of such individual life and health insurance policies will also be GST-free.
Definition of Family and Group
- Family will include all persons covered as family members in the insurance contract.
- Group is defined as employer-employee or other collective entities formed for purposes beyond availing insurance.
- Hence, group insurance policies (such as employer-provided covers) will continue to attract GST.
Clarification on Health Insurance
- The scope of health insurance business includes contracts covering medical expenses (in-patient or out-patient), surgical expenses, hospital costs, travel cover, and personal accident cover.
Change in Goods Transport Agency (GTA) Definition
- Local delivery services provided by or through electronic commerce operators (ECOs) are excluded from the definition of GTA. This means ECO-based local delivery services will not be treated as GTA services for GST purposes.
Effective Date
The notification will come into effect from September 22, 2025.
Industry Impact
This move is expected to make individual life and health insurance policies more affordable, boosting insurance penetration in India. However, group insurance schemes offered by employers or associations will continue under the existing GST framework.
Official copy of the notification has been attached
FAQ :
The GST exemption will be effective from September 22, 2025.
No, the exemption is specifically for individual or family life and health insurance policies. Group insurance policies, such as those provided by employers, will continue to attract GST.
The exemption covers health insurance contracts that include medical expenses (in-patient or out-patient), surgical expenses, hospital costs, travel cover, and personal accident cover for individuals or families.
Yes, reinsurance of individual life and health insurance policies will also be GST-free.
For this exemption, a family includes all persons covered as family members within the insurance contract.
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