GST Cut but Premium Same? Petition in Kerala HC Questions Insurer Over Health Policy Charges

A writ petition has been recently furnished in the Kerala High Court, raising the key issue of whether the Central government’s recent decision to exempt individual health insurance policies from GST is actually being implemented. The petition was filed by Lawrence Joseph, a resident of Ernakulam.

In the plea, the petitioner raised allegations against his insurance company, Star Health and Allied Insurance Company Limited, for making a profit by not reducing the premium payable after the GST exemption was made effective. The petitioner claimed the premium amount he used to pay before the effective date of the GST exemption was almost the same as what he used to pay after the exemption implementation. Which is fairly incorrect as per the law.

Further argued that the insurance company did not pass on the benefit of the tax exemption to its insured, despite the fact that in September 2025, the GST on individual health insurance policies was decreased to zero. Like Joseph, there are several appeals filed before judicial authorities, seeking strict directions for the enforcement of anti-profiteering provisions under the GST Act. A response was sought from the Central government, the GST authorities, and Star Health by Justice Ziyad Rahman AA on Friday.

As per the writ petition filed, the petitioner used to pay Rs 37,906 as his insurance premium before September 2025 for the policy period of 2023-2024. The amount included GST at 18% (amounting to Rs 5,782 on the base premium). After some time, the Central Government of India issued an Official Notification No. 16/2025, dated September 17, 2025, granting GST exemption on individual life and health insurance policies, and the notification was scheduled to take effect on September 22, 2025.

The petitioner claimed that even after the effective date of the GST exemption notification, his insurance company charged him an insurance premium of Rs 37,103, for the policy period starting from November 9, 2025, which was nearly equal to the amount collected from him prior to the GST exemption. This explicitly indicates the benefit of GST exemption was not shifted to the policyholder, i.e., the petitioner.

The petitioner claimed, “…the failure of the Respondent to correspondingly reduce the premium after the removal of GST amounts to illegal retention of tax benefit, unjust enrichment, and profiteering, directly contrary to the express mandate of Section 171 of the Central Goods and Services Tax Act, 2017.”

The petitioner flagged this action as a clear contravention of the provisions of Section 171 of the Central Goods and Services Tax Act, 2017 (CGST Act), which deals with anti-profiteering measures. The provisions say any reduction in the tax rates should be passed on to consumers by businesses by lowering the price of their goods and services accordingly. The petitioner further cited provisions of Rule 127 of the CGST Act, which give GST authorities powers to make sure whether the tax benefit has been shifted to customers or consumers. The action in the present case is also a violation of Articles 14 (right to equality) and 21 (right to life) of the Indian Constitution.