The GST Council has exempt individual life insurance and health insurance policies from GST as part of broader reforms for the indirect tax regime.
All individual health insurance policies, including family floater and senior citizens, will be also be exempted under the new GST structure which will come into effect on September 22.
This means that those seeking to buy health or life insurance will now be able to do so at much affordable prices.
“Many MPs questioned taxing insurance premiums. We’ll make sure benefits of insurance GST reforms is passed on to families, individuals,” said Nirmala Sitharaman.
Also read: GST cut: Small cars, under-350cc motorcycles get cheaper; what about bigger ones?
Apart from health and life insurance policies, other items exempt from GST are 33 life-saving drugs and medicines, cancer medicines, medication for rare diseases, maps, charts, globes, pencils, sharpeners, crayons, pastels, exercise books, notebooks, erasers and more.
Under the new GST policy, which Nirmala Sitharaman says was decided ‘unanimously’ during the 56th GST council meeting, India has decided to cut taxes on hundreds of consumer items ranging from soaps to small cars. With this, the tax structure will become two-tier — 5 and 18 per cent.
Also read: New two-tier GST structure to kick in from September 22: Nirmala Sitharaman
However, a sin tax of 40 per cent will be applied on some items such as pan masala, cigarettes, gutka, chewing tobacco, bidis, aerated waters containing added sugar or flavour, caffeinated beverages, non-alcoholic beverages, motorcycles exceeding 350 cc, and yachts.
Also read: GST reforms: List of items that have received GST rate cut
The new tax slab will come into effect on the first day of Navratri, September 22, said Nirmala Sitharaman. “All this will be effective 22 September 2025, the first day of Navratri… The changes on GST of all products except sin goods, will be applicable 22 September… Sin goods will continue at the existing rates of the GST and compensation cess, where applicable, till the loan and interest payment obligations under the compensation cess account are completely discharged,” she said.