GST on Insurance in 2026: Which Policies Are Exempt

If you buy a life or health policy for yourself or your family, there is no GST on the premium. That exemption has applied since 22 September 2025, and it covers term plans, endowment and ULIP policies, individual health covers, family floaters and senior citizen plans. Group policies, including the one your employer gives you, still carry 18%. So do motor, home, shop and most other general insurance.

GST rates on insurance at a glance

Source: Notification 16/2025-Central Tax (Rate), which inserted entries 36C, 36D and 36E (heading 9971) into the exemption list in Notification 12/2017-CT(R) from 22 September 2025; Notification 15/2025-CT(R), amending entry 15(vi) of Notification 11/2017-CT(R) for third-party insurance of goods carriages; entry 15(vii) of 11/2017 (other financial and related services, 18%). *On endowment and similar savings-linked life policies, rule 32(4) of the CGST Rules taxed only a part of the premium, so the GST on those receipts worked out well below 18% of the full premium.

What counts as “individual”

The notification exempts life and health insurance “where the insured is not a group”. It then explains that the exemption applies when the insured is an individual, or an individual and their family, and that family means everyone insured as family in that one contract. A family floater covering you, your spouse, your two children and your parents therefore stays exempt.

A group, by the same notification, is a set of people who come together for some common purpose other than buying insurance. Employer-employee schemes are the obvious case. A housing society's or a bank's group cover can also count. Those policies keep paying 18%, and the Department of Financial Services FAQ says so in as many words for employer-sponsored group health, group term and group credit life policies.

The same notification defines health insurance business broadly: sickness benefits, hospital and surgical expenses, in-patient or out-patient, and it also lists travel cover and personal accident cover. The DFS FAQ adds that if an individual health policy comes bundled with travel or accident cover and is sold as one product for one price, the whole premium is exempt. If you buy a standalone travel or accident policy, check the invoice and ask the insurer how they have treated it.

Worked example: what a Pune family saves

Prakash and Meera Kulkarni live in Baner with their two school-going kids. They hold a ₹10 lakh family floater with a base premium of ₹24,000 and a ₹1 crore term plan for Prakash at ₹15,000 a year. The premiums here are examples; your own depend on age, cover and insurer.

That is ₹7,020 a year back in the family's budget, assuming the base premium itself did not change. Some insurers did revise base rates after the exemption (more on why below), so compare your new renewal notice line by line with last year's before you assume the full saving.

Renewals: does the old 18% still apply?

It depends on when you paid, which is the question most people actually have. The DFS FAQ says the rate is decided by the date of premium payment. If your renewal was due on 21 September 2025 and you paid on or after the 22nd, no GST applies. If you paid before 22 September, the 18% stays, and there is no refund for it. Your next renewal is exempt.

Instalments follow the same logic one payment at a time. A quarterly instalment paid in August 2025 carried 18%; the one paid in November 2025 was exempt. An advance paid before the 22nd for a premium falling due after it is decided by the time-of-supply rule in section 14 of the CGST Act: if two of the three events (supply, invoice, payment) fall on or after 22 September 2025, the exemption applies. A lapsed policy revived on or after that date is also exempt on the premiums paid for reinstatement.

By now, in 2026, every renewal you pay on an individual life or health policy should show nil GST. If a receipt for one of these still shows 9% CGST and 9% SGST, ask the insurer to correct it.

Car, bike and other general insurance: still 18%

Motor insurance did not get the exemption. Take Sneha in Hadapsar renewing her hatchback's comprehensive policy: own damage plus third party comes to ₹12,500 before tax.

Insurers usually show the premium before GST and then add tax, so this is a straight add-on. If you only have the final figure, divide by 1.18 to get back to the premium. The CGST and SGST calculator does the split for you. The one motor-related cut in GST 2.0 is third-party cover for goods carriages, which fell from 12% to 5%. That helps transporters; it does nothing for private cars or bikes.

Fire, home contents, shop, marine and similar policies also stay at 18%. A business buying them can usually claim the GST as input tax credit if the cover relates to its taxable business.

A short note on input tax credit for insurers

Exempting a supply also stops the insurer from claiming credit on the GST it paid on costs linked to that supply, such as agent commission, advertising and office rent. That lost credit becomes a cost for the insurer. It is the reason some companies nudged base premiums up a little after September 2025. For you as a buyer, it matters only as an explanation if the saving on your renewal looks smaller than a clean 18%.

Checking your premium receipt

On an individual health or life policy, the receipt should show the premium with no CGST, SGST or IGST line, or a GST line of zero. On a group, motor or property policy, you should see 18%, split 9% + 9% when the insurer's branch is in your state or as 18% IGST when it bills from elsewhere. For a refresher on how the lines should look, see our GST invoice format guide, and for every other rate there is the GST rates 2026 list.

General information, not tax advice. Premiums and names in the examples are illustrative.

Last reviewed 9 November 2026.