GST on personal Health & Life insurance premium has been reduced from 18% to nil in September 2025. HR and other leaders should understand what’s changed and how it affects their employees. They should assess what these changes mean for their workplace benefits strategy, group insurance policies and overall employee experience.
On September 4, 2025, the 56th GST Council meeting introduced a major tax relief:
No GST on premiums for individual or personal health and term life insurance.
This move is part of the Indian government’s ongoing effort to simplify indirect taxes and make essential services like insurance more affordable for individuals and families.
So what does this mean for employers and HR teams? Let’s break it down.
If you’re purchasing an individual or personal health insurance policy, you will now pay zero GST on the premium.
This includes:
Example:
If your family floater policy previously cost ₹35,000 (including ₹5,338 in GST), it will now cost only ₹29662,000 — the base premium. That's an instant saving of ₹5,338.
If you’re an employer offering group health insurance or a group term life policy to your team, GST still applies. The exemption announced by the 56th GST council does not cover group insurance premiums paid by companies.
No, since the exemption was specifically for individual Health Insurance, nothing changes for a group health insurance policy in terms of their cost structure or coverage terms for Employees, Spouses and Children.
However,
If your company has a voluntary parental coverage program where employees pay for their parents’ health insurance- You may find employees re-evaluating whether to stay with the corporate plan or go for retail policies. This can create a risk for the sustainability of the parental program.
Group policies still offer better economics, superior coverage, and immediate protection — even for parents. Refer to the table below to understand why:
While the GST in taking individual Top-up will be exempted, effective discount in them will be near 5-8% only as insurers will lose on ITC from other operations.
Buying top-up in a group policy ensures that you have coverage from 1st day rather than having a waiting period, As well as the premium is 5-10% cheaper than individual policy pre GST effectively landing you at the same cost with more accessible insurance partner like PazcareImportant Note: The way a plan is purchased (individually vs. under a group policy) affects GST applicability. HR teams should help clarify this for employees.
For HR leaders and People & Culture teams, this update opens up opportunities to help employees make smarter insurance decisions.
Educate Employees about differences in retail and Group plans for dependents
With no GST, individual policies for parents or spouses are more affordable than ever.
Promote Super Top-Ups for higher coverage
Employees who want extra coverage beyond the company policy can still opt for Super Top-Ups — even though GST may apply depending on how they’re purchased.
Offer personalized insurance advisory
Use Pazcare’s employee benefits platform to help your team compare plans and get the best value — with or without GST.
Enhance wellness focus
With reduced GST on fitness services you can expand corporate wellness programs. Negotiate better rates with fitness partners and Promote preventive health initiatives in your organization.
Finance Head
No, GST has been removed. You only pay the base premium for individual and family health insurance plans.
Yes, for personal term life insurance policies. Group term life insurance still includes GST.
Yes. Group insurance premiums paid by employers are still subject to GST.
It depends. If bought individually, yes. If part of a group policy or deducted via payroll, GST still applies.
Yes. With the GST exemption, individual policies for parents offer greater affordability and flexibility.
Best pricing for you.
Best claim support for your team.
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