If you’ve recently paid a multi-year insurance premium, here’s an important update. Starting September 22, 2025, the GST on individual life and health insurance premiums will drop to 0 per cent, a big relief for new buyers. However, if you’ve already paid for a multi-year policy in advance, the 18 per cent GST you paid will not be refunded. This means the tax benefit applies only to premiums paid after the rate cut takes effect.
No GST Refund on Prepaid Multi-Year Policies
Even if your insurance coverage extends beyond September 22, 2025, there is no provision to refund the GST paid for future years. The tax is collected at the time of payment and deposited with the government, which completes the transaction.
GST Rules Apply to All Payment Modes
This applies to all types of payments, whether you pay your premiums in full upfront or in instalments. However, any monthly, quarterly, or semi-annual premium due on or after September 22 will no longer include GST. Premiums due before this date, even if paid later during the grace period, will still carry the 18 per cent GST.//
Start Coverage After GST Cut to Save Tax
Some insurers are now letting customers start their policy coverage from September 22, even if the policy was purchased earlier. This allows buyers to lock in the same terms while taking advantage of the 0 per cent GST.
Use the Free-Look Period to Benefit from GST Cut
If you’re still in the free-look period usually 15 to 30 days from purchase—you can cancel your policy and get a full refund of the premium and GST, minus any processing fees or charges for the days you were covered. Many policyholders are using this option to cancel recent purchases and reissue them after September 22 to benefit from the GST reduction.
The GST exemption on life and health insurance premiums is a big win for policyholders, lowering the cost of essential financial protection. However, it’s important to understand the details especially if you’ve already prepaid your policy.
While GST already paid won’t be refunded, any future premiums will benefit from the 0 per cent rate. Policyholders planning new purchases or renewals should time their payments carefully to make the most of the tax cut.
