GST on insurance premiums in India now depends entirely on what you are insuring and who is buying the policy. Since September 22, 2025, individual life insurance, individual health insurance, and individual travel insurance carry zero GST. Motor insurance, property and fire insurance, marine and transit cover, and group or corporate health policies still attract 18%. If you are an individual policyholder renewing a term plan or a family floater, your next premium notice should be noticeably lower than last year’s.
Individual Life, Health, and Travel Policies Are Now Exempt
Every individual life insurance policy sold in India has been GST-free since September 22, 2025. The exemption covers term plans, endowment policies, Unit Linked Insurance Plans, and single premium annuity contracts. It applies to both new policies and renewals, so an existing policy benefits at its next renewal date. Before the change, individual policyholders paid anywhere from 1.8% to 18% GST depending on the product.
Individual health insurance received the same treatment on the same date. Family floater plans, senior citizen policies, and standalone individual health covers are all exempt. So are rider charges attached to the base policy, and reinsurance services connected to these individual policies.
Individual travel insurance also became GST-free on September 22, 2025. Travel policies previously attracted 18% GST on the full premium.
To put numbers on the relief: a family paying ₹25,000 a year for a health floater saves ₹4,500 annually, and someone holding a term plan with a ₹15,000 premium saves ₹2,700.
Premiums That Still Carry 18% GST
Group and corporate health insurance is still taxed at the full 18%. If your employer provides your coverage, that premium continues to include GST. Many salaried employees assume the individual exemption reaches their workplace policy; it does not.
Motor vehicle insurance attracts 18% GST on both comprehensive policies and standalone third-party plans. Add-on covers such as zero depreciation and engine protection carry the same rate. The 55th GST Council meeting did exempt contributions that general insurers make from third-party premiums to the Motor Vehicle Accident Fund, but that relief sits with the insurer and does not flow through as a visible cut to your premium.1Press Information Bureau. Recommendations of the 55th Meeting of the GST Council
Fire insurance, marine and transit cover, home and warehouse property insurance, and other commercial general insurance policies all attract 18% GST on the full premium. These are pure risk products with no savings component, so the tax applies to the entire amount.
Government Schemes and Micro-Insurance
Several government-backed schemes were already GST-exempt before the September 2025 changes and remain so. The Pradhan Mantri Jeevan Jyoti Bima Yojana and the Pradhan Mantri Suraksha Bima Yojana carry no GST; their annual premiums stay at ₹436 and ₹20 respectively. Crop cover under the Pradhan Mantri Fasal Bima Yojana is also exempt, and so are government-funded schemes like the Universal Health Insurance Scheme and the Niramaya Health Insurance Scheme for persons with disabilities.
Micro-insurance products approved by IRDAI with a sum assured up to ₹2 lakh are exempt from GST. The threshold was raised from an earlier limit of ₹50,000.2Press Information Bureau. Changes Relating to GST Rates on Certain Services
How the 18% Is Calculated on Taxable Premiums
Where GST still applies, the insurer sets a base premium reflecting risk, administrative costs, and commission. The 18% is then added on top. A motor policy with a base premium of ₹10,000 carries ₹1,800 in GST, for a total of ₹11,800. The tax splits as 9% CGST to the central government and 9% SGST to your state, or as 18% IGST when the transaction crosses state lines.
Your premium statement should show the base premium and the GST as separate line items. If they are combined, you can request a tax invoice from the insurer that breaks them out. Businesses that may be eligible to claim input tax credit need this breakdown.
GST and Your Income Tax Deduction
Only the base premium counts toward income tax deductions, not the GST portion. Under Section 80D for health insurance and Section 80C for life insurance, the deductible amount is what you pay for coverage, not the tax on top of it.
For individual policyholders, this distinction has essentially disappeared, because the GST component on individual life and health policies is now zero. It still matters if you are paying for a group health policy or a motor policy where 18% GST applies: that tax does not add to your Section 80D or 80C deduction.
What the Old Rates Looked Like
These rates applied from July 2017 through September 21, 2025, and are worth checking against older premium statements.
- Term life insurance: 18% on the full premium, since term plans are pure risk cover.
- Endowment and traditional plans: an effective 4.5% on first-year premiums (18% on 25% of the premium) and 2.25% on renewals (18% on 12.5%).
- Unit Linked Insurance Plans: 18% on the fund management, mortality, and administration charges; the portion invested in market-linked funds was not taxed.
- Single premium annuity plans: an effective 1.8% (18% on 10% of the single premium).
- Individual health insurance: 18% on the full premium.
- General insurance covering motor, fire, marine, and property: 18% on the full premium, unchanged today.
The valuation logic behind those effective rates for savings-linked policies came from Rule 32 of the CGST Rules, which set the taxable value as the gross premium minus any amount disclosed as allocated to investment. Where no allocation was disclosed, the taxable share defaulted to 25% of the first-year premium and 12.5% thereafter, or 10% for a single premium annuity.3GST Council. Valuation in GST Those rules still govern any group life products that continue to attract GST.