India Just Made Life & Health Insurance GST-Free: What It Means for You and NRIs in Canada (2026)
India removed GST entirely on individual life and health insurance policies. Here's exactly what changed, what's still taxed, and what it means for NRIs in Canada considering an Indian policy.
A Major Tax Change for Indian Insurance Buyers
In one of the more significant recent changes to India's insurance landscape, the Government of India reduced GST from 18% to zero on individual life and health insurance policies, effective September 22, 2025. For anyone buying or holding an individual Indian insurance policy - including NRIs in Canada - this is a direct, meaningful reduction in the real cost of coverage.
What's Actually Exempt
- Individual life insurance policies - including term insurance, ULIPs, and endowment policies
- Individual health insurance policies
- Family floater health insurance plans
- Health policies with embedded covers (such as travel or personal accident benefits) sold as a single product
- Reinstated or revived individual policies issued on or after the effective date
- Reinsurance of the above individual policies
What's Not Included
The exemption is specific to individual policies - it does not extend to group insurance policies, employer-sponsored group health or life insurance, or group credit life and group term policies, all of which remain subject to the standard 18% GST. If you're comparing an individual policy against employer-provided group coverage, this tax difference is now part of that comparison.
How the Timing Rule Works
GST treatment is based on when the premium payment is actually made, not the policy's original start date or technical due date. A premium paid on or after September 22, 2025 qualifies for the exemption, even if the due date was earlier - and for policies paid in instalments, each instalment payment is assessed separately based on the date that specific payment is made.
What This Means for NRIs in Canada
For NRIs weighing whether to buy life or health insurance in India versus in Canada, this GST exemption meaningfully changes the cost comparison in India's favour, at least on the tax side. NRI policies are generally treated as export (zero-rated) or exempt under GST law depending on whether they meet export-service conditions - meaning the removal of GST on individual policies is a direct reduction in the effective cost of holding one. This doesn't change the other factors that go into an NRI's decision - such as how claims are paid out to a foreign bank account, or Canada's own tax treatment of the payout - but it does remove a cost that used to sit on top of every premium payment.
Comparing Canadian vs. Indian Coverage as an NRI?
DMPG helps NRIs weigh Canadian and Indian insurance options side by side, including how tax changes like this GST exemption factor into the real cost. Reach out for a free, no-obligation consultation.
Frequently Asked Questions
Did India actually remove GST on life and health insurance?
Yes - effective September 22, 2025, the Government of India reduced GST from 18% to zero on all individual life insurance policies (including term, ULIPs, and endowment policies) and individual health insurance policies, including reinsurance of the same, as confirmed by India's Department of Financial Services.
Does the GST exemption cover family floater health plans?
Yes - the exemption explicitly covers family floater health insurance plans, along with health policies that include embedded covers like travel or personal accident benefits sold as a single product, in addition to standard individual health policies.
Is group or employer-provided insurance also GST-free now?
No - group insurance policies, employer-sponsored group health or life insurance, and group credit life or group term policies remain subject to the standard 18% GST. The exemption applies specifically to individual policies.
How does this affect an NRI buying an Indian life or health policy?
NRI policies are generally treated as export (zero-rated) or exempt depending on whether they meet export-service conditions under GST law - meaning the removal of GST on individual policies is a direct, meaningful cost reduction for NRIs purchasing individual life or health insurance in India.
Does the exemption apply to a policy I already had before September 2025?
The GST treatment depends on when the premium is actually paid, not the original policy start date - if a premium payment is made on or after September 22, 2025, the exemption applies even if the technical due date was earlier, and each instalment payment is assessed separately based on when that specific payment occurs.
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