Health and life insurance exempted from GST as council approves major tax overhaul

In a landmark decision aimed at easing household expenses, the GST Council on Wednesday (September 3) scrapped the Goods and Services Tax (GST) on individual health and life insurance policies. The move, effective from September 22, eliminates the 18 per cent levy that was previously applied, delivering a significant relief to families and the healthcare sector. The announcement came during the 56th GST Council meeting, which also saw the removal of the 12 per cent and 28 per cent tax slabs. In their place, a streamlined structure was introduced, including a 40 per cent bracket reserved for sin and luxury goods.

Also Read: GST Reforms approved: What gets cheaper and costlier from September 22?

Union Finance Minister Nirmala Sitharaman said the reforms were designed to lighten the financial load on ordinary citizens. “These changes have been undertaken with the common man in mind. Daily essentials, key industries, and critical sectors like health, agriculture, and education have all been given relief,” she said while addressing the media.

What are the other GST reductions?

The restructuring will have far-reaching effects across multiple sectors. Everyday household items such as hair oil, shampoo, soap, toothpaste, toothbrushes, shaving cream, ghee, butter, cheese, dairy spreads, packaged snacks, and utensils will now fall under the 5 per cent tax bracket, down from 12–18 per cent. Baby products including feeding bottles, napkins, and clinical diapers have also been cut to 5 per cent, as have sewing machine parts.

In healthcare, alongside insurance, GST has been fully waived on medical oxygen, thermometers, and diagnostic kits, while corrective spectacles are now taxed at just 5 per cent. Education supplies such as maps, charts, globes, pencils, crayons, notebooks, and erasers are also fully exempt.

Farmers will benefit from lower GST on tractors, tyres, drip irrigation systems, bio-pesticides, micronutrients, and other agricultural machinery, which now fall in the 5–12 per cent range instead of up to 18 per cent. The automobile sector has also received a boost, with small cars, motorcycles above 350cc, three-wheelers, and transport vehicles moving to the 18 per cent slab from the previous 28 per cent. Electronics such as air conditioners, large-screen televisions, projectors, monitors, and dishwashers have also been brought down to 18 per cent.

The government expects the rationalisation to ease family budgets, boost labour-intensive industries, support agriculture, and provide fresh momentum to the broader economy.