CBIC Clarifies No GST on Life and Health Insurance for Individuals

Notification No. 16/2025- Central Tax (Rate), Dated 17-09-2025

1. Introduction

The Central Board of Indirect Taxes and Customs (CBIC) has issued a series of important notifications aimed at clarifying and amending various GST provisions. These notifications cover exemptions for insurance services, concessional rates for specific goods, liability on e-commerce operators, and revisions to compensation cess rates. Collectively, they bring significant compliance updates for businesses and taxpayers.

2. Extension of GST Exemption for Insurance Services

Through an amendment to Notification No. 12/2017–Central Tax (Rate), dated 28-06-2017, CBIC has extended exemption to services relating to life insurance and health insurance. The exemption will apply where the insured is not a group but rather an individual or an individual and their family. Importantly, the term ‘family’ has been clarified to include all individuals insured together under the contract, ensuring wider coverage of the exemption. Additionally, reinsurance of such insurance services is also covered.

3.Amendments on GST-Exempt Goods and Concessional Rates

CBIC has issued Notification No. 10/2025–Central Tax (Rate) to revise the list of GST-exempt goods, providing relief to specific sectors. Further, Notification No. 11/2025–Central Tax (Rate) prescribes concessional GST rates on specified goods used in petroleum exploration and production operations. This move is intended to support the energy sector and align GST with industry requirements.

4. GST Liability for Local Delivery Services via E-Commerce Operators

Under Notification No. 17/2025–Central Tax (Rate), the CBIC has clarified that GST on local delivery services shall be paid by e-commerce operators (ECOs), except in cases where the service provider is independently liable to register under Section 22(1) of the CGST Act. This provision ensures proper tax collection and simplifies compliance by shifting the liability to ECOs in cases involving unregistered suppliers.

5. Revision of Compensation Cess Rates

Lastly, Notification No. 02/2025–Compensation Cess (Rate) introduces important changes by prescribing Nil cess on several goods, including aerated waters, lemonade, caffeinated and carbonated beverages, coal, lignite, peat, passenger vehicles seating up to 13 persons, and certain motor vehicles. This rationalisation is expected to reduce costs for businesses and consumers while aligning cess rates with current policy objectives.

6. Conclusion

These CBIC notifications collectively provide greater clarity and relief across multiple sectors. By extending exemptions for individual insurance policies, rationalising GST and cess rates, and assigning GST liability on ECOs for local delivery, the government has taken steps to simplify compliance, support key industries, and enhance transparency in GST administration.

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