Summary
- The 56th GST Council has exempted individual life and health insurance services from GST effective September 22, 2025, through Notification No. 16/2025-Central Tax (Rate).
- This exemption raises concerns as it removes output GST but blocks insurers' ability to claim Input Tax Credit (ITC), potentially limiting savings for policyholders to 10-15%.
- The Supreme Court's ruling in State of Karnataka v. Taghar Vasudeva Ambrish highlights ongoing disputes over exemption interpretations, suggesting future litigation is likely.
- The timing of the exemption's implementation, just after the anti-profiteering oversight sunset, raises questions about consumer benefit verification moving forward.
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