Insurance industry faces backlash over premium hikes despite GST exemption

Despite the GST Council exempting individual health and life insurance premiums from GST effective September 22, 2025, the insurance industry faces criticism for premium hikes by some providers. Stakeholders express concern that insurers, due to operational cost pressures and inability to claim input tax credit (ITC) post-exemption, are transferring costs to customers through increased premiums. The exemption means policyholders no longer pay an 18% tax, but insurers lose GST credits on inputs like marketing and commissions, reducing margins. Regulators and consumer groups urge insurers to balance cost recovery without negatively impacting affordability. The government has directed insurers to pass GST relief fully to policyholders. This situation underscores the challenges of tax reform implementation in insurance and highlights calls for greater industry transparency.