Insurance companies preparing to transmit 18% GST exemption advantages to clients
Published on September 18, 2025
The Goods and Services Tax (GST) on premiums for individual life and health insurance policies is set to reduce starting from September 22, 2025. This change, announced by the Insurance Regulatory and Development Authority of India (IRDAI), is expected to bring significant benefits for policyholders.
Several insurance companies, including Bajaj Allianz General Insurance, Bajaj Allianz Life Insurance, Universal Sompo General Insurance, ManipalCigna Health Insurance, and Zurich Kotak General Insurance, have confirmed they will pass on the GST reduction to policyholders.
For those opting for individual top-up health or life policies outside their group cover, the reduced GST will improve affordability and satisfaction. Companies offering flexible benefit plans, which subsidise or reimburse employees for individual health or life policies, may see a marginal reduction in reimbursements.
However, the impact of the GST reduction is more indirect for corporate clients through employee top-ups or company schemes that include individual policies. Sandeep Dadia, CEO & Country Head of Lockton India, states that corporate clients providing group health or life cover to employees are unlikely to see a direct reduction in premiums due to the GST reduction.
The IRDAI has directed insurers to pass the full benefit of the GST relief to policyholders. Insurers will lose the benefit of Input Tax Credit in a zero GST regime and will have to take a hit while passing the full benefit of GST reduction.
To facilitate this change, companies need to reconfigure IT and accounting systems, update product pricing, and align premium collection processes. The implementation of GST reduction requires better coordination among all stakeholders, including insurers, brokers, and customers.
The Insurance Brokers Association of India (IBAI) is focusing on educating clients, clarifying premium break-ups, and helping individuals navigate changes in their retail policies. Some insurance companies, like ManipalCigna Health Insurance and Zurich Kotak General Insurance, are reworking their actuarial and economic models to ensure that the entire benefit of the GST reduction is passed on to customers.
Customers will only need to pay the net premium amount for their insurance policies after the GST reduction. Companies like Universal Sompo General Insurance have announced that their customers will only be required to pay the base premium for their health insurance policies without any additional tax.
Bajaj Allianz General Insurance and Bajaj Allianz Life Insurance are communicating with customers and agents about the benefits of the GST reduction. They are also initiating communication activities on their social media platforms to ensure maximum awareness about the GST reduction.
As of September 2025, specific insurance companies that have implemented the waiver of 18 percent GST on life and health insurance premiums have not been publicly detailed, and customer communication methods vary but typically include official emails, SMS notifications, and updates on company websites.
The exemption from GST on individual health and life insurance premiums is seen as a significant opportunity for insurers to increase coverage, penetration, and enhance product proposition. This move is expected to encourage more individuals to invest in health and life insurance policies, providing a boost to the insurance sector.
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