GST on Health Insurance Ends September 22: Will You Get a Refund on Premiums Already Paid?

From September 22, 2025, health and life insurance premiums will no longer attract the 18% Goods and Services Tax (GST). This policy change will significantly reduce the cost of new policies and renewals, providing welcome relief for policyholders. But a key question remains: will customers who have already paid their premiums—especially multi-year policies—receive a GST refund?

Let’s break down what this change means for existing and new policyholders.

Will You Get a GST Refund on Premiums Paid Before September 22?

The straightforward answer is no. If you’ve already paid premiums for multiple years in advance—for example, a three-year health or life insurance plan—you will not receive a GST refund. The reason is simple: insurers have already deposited the tax collected with the government. Since there is no provision for retrospective refunds, the tax you’ve paid cannot be claimed back.

What Happens to Monthly or Quarterly Premium Payments?

If your premium is billed monthly, quarterly, or semi-annually, the timing of your next payment matters:

• Due before September 22, 2025: You must pay the premium with 18% GST.

• Due on or after September 22, 2025: You will not be charged GST on your premium.

For example, if your monthly premium is due on September 23, you will benefit from the tax-free structure.

Grace Period Payments: Will GST Still Apply?

The grace period allows policyholders to pay after the due date without losing coverage. However, GST liability depends on the original due date, not the actual payment date.

• If your premium was due on September 15, but you pay during the grace period after September 22, you will still be charged 18% GST.

• The exemption applies only to premiums with a due date on or after September 22, 2025.

Refunds During the Free-Look Period

The free-look period gives customers a chance to cancel a policy within 30 days of purchase and claim a refund. If you bought a policy on September 11 and decide to cancel it in October during the free-look window, the insurer must refund both the premium and the GST. However, administrative charges such as stamp duty or medical test costs may be deducted.

Should You Buy a New Policy After September 22?

Yes—if you are planning to purchase a new health or life insurance policy, waiting until after September 22 is the smarter choice. From that date onward, you won’t pay GST on premiums, effectively lowering your insurance cost.

In fact, some insurers such as ICICI Lombard are already offering the option to start policies from September 22, ensuring customers benefit from the GST exemption immediately.

Bottom Line

The removal of GST on health and life insurance premiums is a major positive step for consumers. While existing multi-year policyholders won’t get refunds, those paying in installments or purchasing new policies after September 22 will directly benefit from the reduced cost.

For anyone considering fresh coverage, delaying your purchase by just a few days could translate into significant long-term savings.