Notification No. 16/2025- Central Tax (Rate), Dated 17-09-2025
1. Introduction
The Central Board of Indirect Taxes and Customs (CBIC) has announced an important amendment to Notification No. 12/2017 – Central Tax (Rate), dated 28th June 2017. The changes, which take effect from 22nd September 2025, are aimed at expanding the scope of exemptions under GST for certain insurance services.
2. Extension of Exemption
Under the amended notification, the exemption from GST has been extended to cover services of life insurance and health insurance provided by an insurer to the insured. This extension seeks to provide relief in cases where the insured is not a group but an individual or an individual along with their family. Additionally, the exemption also covers reinsurance of these insurance services, ensuring a comprehensive benefit.
3. Clarification on Scope of ‘Family’
To remove ambiguity, the CBIC has also clarified the scope of the term ‘family’ for the purpose of this exemption. It has been specified that the term includes all individuals insured as family under the insurance contract, ensuring that household-level coverage falls within the ambit of the exemption.
4. Implications for Insurers and Policyholders
This amendment brings significant relief for individual policyholders and their families, making life and health insurance policies more affordable by removing the GST burden. Insurers, on the other hand, gain clarity on how exemptions apply, especially in cases involving family floater policies or non-group coverage, thereby reducing compliance disputes.
5. Conclusion
By extending the GST exemption to individual and family insurance policies and their reinsurance, the CBIC has taken a step toward strengthening social security measures and promoting wider adoption of life and health insurance. This change aligns with the government’s broader policy objective of expanding insurance penetration and ensuring financial protection for households.
