Health policy expiring on 20th September and GST reduction from 22nd September, how will you get the benefit of the cheap policy?

The GST Council decided to eliminate the 12% and 28% slabs and merge them into 5% and 18%. Also, a new slab of 40% was created on luxury goods. However, health and life insurance have been given special exemptions.

Finance Minister Nirmala Sitharaman held a press conference after the 56th meeting of the GST Council. In this, she gave a big gift to the general public of the country before Diwali. She announced a big change in the GST slab. Also, told that GST on health and life insurance policies has been completely abolished. This change will come into effect from 22 September 2025, due to which the earlier 18% GST on individual health insurance premium will become zero. Now the question arises that if your health policy is expiring on 20 September, then how can you take advantage of this reduction? Should we renew the old policy or get a new one? Let's find out.

What has changed in health insurance?

The GST Council decided to eliminate the 12% and 28% slabs and merge them into 5% and 18%. Also, a new slab of 40% was created on luxury goods. However, health and life insurance have been given special exemption. The Finance Minister said that GST will be zero on individual health policy, family floater, critical illness, and term life insurance. Some rates may still be applicable on group insurance or corporate policy, but individuals have been given complete relief. This change will be effective from September 22, and insurance companies have been instructed to calculate the premium according to the new rates.

How much will the premium be affected?

Industry experts estimate that after the GST cut, the premium will be 15-18% cheaper, because the burden of GST fell directly on the customer. If the policy is expiring on September 20, then if you renew it immediately, the old rate of 18% GST will be applicable, whereas after September 22, it will be zero. In such a situation, how can you take advantage?

What to do before the expiry date?

According to the Insurance Regulatory and Development Authority of India (IRDAI), a grace period of 30 days is available when the health policy expires. If your health policy is expiring on September 20, then you can renew it till October 21. There will be no break in your coverage. During this time, if any claim comes, it will be covered. The Finance Minister has clearly said that the benefit of GST reduction will be available on all new and renewal policies, which will be issued after September 22.

These methods will help

Use the grace period: If your policy is expiring on September 20, then get it renewed on September 22 or after that. This will result in zero GST on the premium. For example, if your annual premium is Rs 20,000, earlier GST was Rs 3,600. Now you will have to pay only Rs 20,000 of the premium.

No-claim bonus and waiting period: As per IRDAI rules, renewal during the grace period retains the no-claim bonus (NCB) and waiting period for pre-existing diseases. If you are more than 30 days late, the policy lapses and you have to buy a new policy, in which the waiting period may be reset.

Contact the insurance company: You can ask your insurance company how they are implementing the GST reduction. This will help you in buying a policy.