The Kerala High Court has issued a notice in response to a petition claiming that an insurance company failed to reduce health insurance premiums even after the Central government removed Goods and Services Tax (GST) on individual health insurance policies.
The case, Lawrence Joseph v. Union of India & Others, was heard by Justice Ziyad Rahman AA on Friday. The court asked the Central government, GST authorities, and Star Health and Allied Insurance Company Limited to respond to the allegations raised in the petition.
The GST Council has removed the 18% GST on individual health insurance premiums. From 22 September 2025, health insurance policies are now placed under the 0% GST (exempt) category. This means policyholders no longer need to pay GST on their insurance premium.
What Was the Earlier GST Rate?
- Before the change, health insurance premiums attracted 18% GST.
- This tax increased the overall cost of health insurance policies.
What Has Changed Now?
- The GST Council has removed the 18% GST on individual health insurance.
- The new GST rate is 0% (exempt) from September 22, 2025.
- Policyholders now pay only the base premium amount without GST.
Which Policies Benefit?
- Individual health insurance policies
- Family floater health insurance plans
- Senior citizen health insurance policies
- Related reinsurance services
How Much Can People Save?
Earlier, a policy with a premium of ₹50,000 would attract about ₹9,000 as GST (18%), making the total ₹59,000. After the GST exemption, the payable amount will remain ₹50,000, reducing the cost significantly.
Why Was GST Removed?
- To make health insurance more affordable for citizens.
- To increase health insurance coverage in India.
- To reduce the financial burden caused by rising medical expenses.
Background of the Petition
The petitioner, Lawrence Joseph, is a resident of Ernakulam and runs a law book agency near the Kerala High Court. He has been holding a family floater health insurance policy from Star Health since 2017 for himself and his spouse.
According to the petition, Joseph paid an insurance premium of ₹37,906 for the policy period 2023–2024. This amount included 18% GST, which came to ₹5,782, charged on the base premium.
Later, the Central government issued Notification No. 16/2025 on September 17, 2025, announcing a complete GST exemption on individual life and health insurance policies. The exemption came into effect on September 22, 2025.
Allegation of Profiteering
Despite the GST exemption, the petitioner said that when he renewed his policy starting November 9, 2025, the insurance company demanded a premium of ₹37,103.
Joseph argued that this amount is almost the same as the earlier premium that included GST. According to him, this indicates that the insurance company did not pass on the benefit of the tax exemption to policyholders.
He alleged that this conduct amounts to profiteering and unjust enrichment, as the company allegedly retained the tax benefit instead of reducing the premium payable by customers.
The petition relies on Section 171 of the Central Goods and Services Tax Act, 2017, which deals with anti-profiteering measures.
This section requires businesses to pass on any reduction in tax rates to consumers by reducing the price of goods or services.The petitioner also cited Rule 127 of the CGST Rules, which authorizes authorities to investigate and determine whether tax benefits have been properly passed on to consumers.
Allegations Against Authorities
The plea further alleges that the Central government and the GST Council have failed to ensure proper enforcement of anti-profiteering provisions under the GST law.
According to the petition, such inaction is arbitrary and unconstitutional, violating Article 14 (Right to Equality) and Article 21 (Right to Life) of the Constitution of India.
Reliefs Sought
Through the petition, Joseph has requested the High Court to declare that collecting insurance premiums without passing on the GST exemption benefit is illegal and arbitrary, Direct authorities to strictly enforce anti-profiteering provisions under GST laws and order Star Health and Allied Insurance Company Limited to refund the excess premium collected, along with interest.
Legal Representation
The petitioner is represented by advocates Raghul Sudheesh, J Lakshmi, Ambily T Venu, Rachel Mary Jacob, Athulya Vaishnavi and Navaneeta Manu.The matter will proceed after the respondents submit their replies to the court.
