Union Finance Minister Nirmala Sitharaman on Wednesday announced a major policy shift: individual life and health insurance policies will now be fully exempt from Goods and Services Tax (GST).
Termed as the “Next-Gen GST Reform”, the decision comes as a historic Diwali gift to the nation and is expected to ease the cost of living while boosting economic activity. The 56th GST council meeting decided to rationalise GST rates to two slabs of 5 per cent and 18 per cent by merging the 12 per cent and 28 per cent rates.
Here are the top Frequently Asked Questions (FAQs) answered:
When will the changes in GST rates come into force?
As per recommendations of the GST Council in its 56th meeting, the changes in GST rates on services and goods other than cigarettes, chewing tobacco products like zarda, unmanufactured tobacco and beedi will be effective from 22nd September, 2025.
For specific goods such as cigarettes, chewing tobacco products like zarda, unmanufactured tobacco, and beedis, the current GST rates and compensation cess will remain unchanged for now. The revised rates will be implemented at a later date, which will be announced once all loan and interest obligations related to the compensation cess have been fully cleared.
What is the GST rate on medicines?
All drugs/ medicines have been prescribed a concessional rate of GST of 5%, except those specified at a nil rate.
The GST Council has approved a major overhaul of the tax structure, reducing rates on a wide range of items across sectors including daily essentials, agriculture, and healthcare. The reforms, aimed at boosting domestic spending and cushioning the economic blow of US tariffs, will make items like shampoo, butter, tractors, and health insurance cheaper. Here's a look at the rate reductions across major sectors. PTI GRAPHICS.(PTI09_04_2025_001010008B)
Does the 5% GST rate apply to all medical devices?
The rate of 5% applies to all medical devices, instruments, and apparatus used in medical, surgical, dental and veterinary uses; other than that are specifically exempted.
