Fake Irdai Notice on GST Cut: What Policyholders Should Watch Out For

The government, on September 3 2025, scrapped the Goods and Services Tax (GST) on health and life insurance premiums. For years, households paid an additional 18 per cent tax on top of already rising premiums. Now, with the levy gone, premiums are expected to come down, make insurance more affordable, and thereby increase the insurance penetration in India.

But as with most big-ticket policy changes, the announcement has also opened the door to confusion and misinformation.

Beshak.org, an insurance advisory platform, has flagged a viral fake message regarding the recent GST cut announcement. The forward, which has been circulating on WhatsApp and other social media platforms, claims that this GST cut will apply only to policies renewed after September 22, 2025, or to new purchases, and that it will not be valid for policies in the grace period.

The notice even pretends to be issued by the Insurance Regulatory and Development Authority of India (Irdai).

The platform has clarified that no such circular has been issued by the regulator.

It is important to note that GST already paid on multi-year policies are not refundable. In case of policies already sold, the benefit of exemption would still be available on the renewal premium, as and when it becomes due after the coming into force of this exemption (i.e. September 22, 2025).

How can you spot an authentic notice?

Genuine circulars from Irdai always carry a clear reference number, date and are published in an official format on the regulator’s website.

This viral forward had none of these. The advisory was simple: don’t fall for such messages, and always verify regulatory updates directly from Irdai’s official website or from your insurer.

GST Removal on Health & Life Premiums

This fake notice comes at a time when policyholders are already trying to understand what the GST cut means for them. The government’s decision, announced by Finance Minister Nirmala Sitharaman after a GST Council meeting, is expected to bring down insurance premiums.

Since GST formed a sizeable chunk of costs, collections were about Rs 16,398 crore in FY24 alone, the removal should, in theory, make policies more affordable.

However, as CA Manas Chugh of Osgan Consultants Tax told Outlook Money, for policyholders, the immediate benefit will be a reduction in premium invoices by 18 per cent but since insurers are absorbing unrecoverable GST on their input costs, the net advantage that can realistically be passed on to customers is expected to be in the range of 5 to 6 percent, rather than the full 18 per cent headline reduction.

“With premiums now moved to a zero-rate bracket, insurers will no longer levy GST on output, but at the same time, they lose the ability to claim ITC on their input costs. As a result, the GST paid on these services becomes a direct expense rather than a pass-through item,” he said.

Moreover, though the zero-GST rule comes into effect on September 22, 2025 - insurers may take some time to reprice renewals fully, given the complexities in adjusting prices and contracts already in force.

This delay, along with the spread of misinformation like the fake Irdai notice, not only risks unnecessary anxiety among policyholders but may also mislead them into thinking they are not eligible for the benefit.

For consumers and policyholders, the message is simple: be cautious with forwarded messages and don’t trust any until you see a reference number, date, and proper format.

Even then, there is no harm in checking the official websites to ensure the circular you received, or are about to forward, is not fake.