The GST Council, chaired by Union Finance Minister Nirmala Sitharaman, met for the 57th time on 8 October 2026 and recommended a change that touches workplace insurance. According to the official press release issued by the Press Information Bureau (PIB) the same evening, the Council proposed amending section 17(5) of the Central GST (CGST) Act to remove the restrictions on claiming input tax credit (ITC) on, among other things, health and life insurance.
What input tax credit means
Input tax credit lets a GST-registered business reduce the tax it owes on its own sales by the GST it has already paid on goods and services bought for the business. Section 17(5) of the CGST Act lists so-called blocked credits: items on which this set-off is not allowed even when they are business expenses. Health and life insurance has been on that list. So when a company buys a group health or group term life policy for its employees and pays GST on the premium, that tax has largely been a cost it could not recover.
The PIB release says removing the restriction "will reduce the cascading of taxes", meaning tax being charged on top of tax as it moves along the supply chain.
Who is affected
The change is relevant mainly to group policies that employers buy, not to policies individuals buy for themselves. Business Standard notes that in September 2025 GST on individual life and health policies was cut from 18 per cent to zero, and ITC was withdrawn for individual policies at that time. Employer-provided group cover was not part of that exemption.
The group market is large. Business Standard, citing General Insurance Council data, reports that group health premiums exceeded ₹68,000 crore in FY26. Life insurers collected around ₹2.75 trillion in group premiums, a figure that also includes credit-life policies issued through banks, NBFCs and microfinance institutions, not only employer schemes.
When it takes effect
No date has been announced. The PIB release says the Council's recommendations take legal effect only through subsequent law amendments, notifications or circulars, and this item requires an amendment to section 17(5) of the CGST Act. The Week reports that the proposed changes to the GST law are to be implemented in a staggered manner from early next year, but neither the release nor news reports give a specific date for the insurance change.
Other decisions at the meeting
The Council made no changes to GST rates. Among other recommendations, it proposed withdrawing the arrest powers of GST officers, raising the threshold for prosecution from ₹1 crore to ₹5 crore, lowering the maximum general penalty from ₹25,000 to ₹10,000, and automating refund processing in two phases.