The Insurance industry, which has seen a slowdown in growth rates in premiums in August, expects zero GST on insurance, effective from Monday, to drive adoption and boost growth.
Life and health insurance, along with reinsurance, have been exempted from GST. The tax rate was 18 per cent with input tax credit earlier.
Vineet Arora, executive director and chief business officer, HDFC Life, told The Telegraph that lower taxes will lower the overall cost of securing protection, making life insurance more affordable and accessible for families across income segments.
“We expect to see greater demand for retail life insurance products such as term, ULIPs, and endowment plans. Younger earners and families in tier-2 and tier-3 cities, who are often more price-sensitive, are likely to be early adopters of this change,” said Arora.
“Over time, this will improve insurance penetration in India —currently at just 2.8 per cent for life insurance compared with global averages of over 7 per cent,” he said.
“We expect customers to welcome this reform positively, as reduced premiums directly address affordability — one of the key barriers to insurance adoption. Over time, this change has the potential to drive higher policy uptake, renewals and broader coverage. As part of the transition to a GST-exempt regime, we are already communicating with our customers and agents about the benefit arising through this change,” said Tarun Chugh, MD and CEO of Bajaj Allianz Life Insurance.
“The net outgo for individual consumers has been reduced for products like health insurance, personal accident and travel insurance, maintaining the same policy coverage and claims servicing standards. The exemption applies to new policies, portability as well as migration, enabling individual policyholders to benefit from lower insurance premiums,” said Naveen Chandra Jha, MD and CEO of SBI General Insurance.
Data compiled by CareEdge Ratings show that the annual premium equivalent increased by 6.6 per cent in August 2025, slower than the 10.5 per cent a year ago. Non-life insurance sector grew 1.6 per cent in August compared with 4.2 per cent previous year.
