There will be no GST on health and life insurance

An important decision has been taken in the 56th meeting of the GST Council to give relief to the general public. Now there will be no GST on health and life insurance. Till now, 18 percent tax was charged on both of them. This exemption will be implemented from the first day of Navratri, 22 September 2025, ie. After this decision, the premium of policies like health insurance and term insurance will now become cheaper. According to experts, insurance premiums may decrease by up to 15%.

Why was tax till now and what will change now

Till now, people who used to take health or life insurance had to pay 18% GST on the real price of the policy. That is, the more insurance, the more tax. Now the government has completely removed this tax. This means that there will be no part of tax in the premium that you used to fill earlier. With this, taking insurance can become a little relief for the common people. However, this change can prove to be a shock for insurance companies. According to a report by HSBC, the decrease in premium may increase demand, but companies may affect 3 to 6%.

Government will suffer loss, but people will get benefit

The government may suffer revenue loss of $ 1.2 to $ 1.4 billion every year with this decision. But the council believes that more people can be attracted towards it by making insurance more accessible. Experts believe that in the long run this step will strengthen the insurance sector and increase insurance coverage in the country. However, it is also worth noting that how much customers will get the direct benefit, it will also depend on the strategy to decide the price of insurance companies and the use of input tax credit (ITC).

Big change in tax slab too, 40% GST on these goods

Along with removing tax on insurance, the GST Council has also made a big change in the tax structure. Now only two main tax slabs in the country will remain 5% and 18%. Some major changes have been made with this.

• Tax slabs of 12% and 28% have been completely eliminated.

• Everyday things such as medicines, grocery, cement and small cars will now be cheaper as they have been put in low tax slab.

• On the other hand, tobacco, cold drinks and expensive cars such as sin and luxury goods will now be directly taxed at 40%.

With this, the government will get less tax from the insurance sector on the one hand, on the other hand, it will be able to compensate to some extent with luxury goods.