SBI General Insurance's profitability is expected to suffer due to the GST rate reduction.

SBI General Insurance anticipates a negative impact on its short-term profitability due to the recent reduction in the Goods and Services Tax (GST) rate on health and life insurance premiums, started on September 22, 2025.

GST Rate Cut and Its Implications

A major reform that lowers the GST rate on individual health and life insurance premiums from 18% to 0% was announced at the 56th GST Council meeting. This action seeks to increase total insurance penetration, lower premiums for policyholders, and advance the government's objective of "Insurance for All by 2047." ​

Impact on SBI General Insurance's Profitability

The leadership of SBI General Insurance has explained that while the GST exemption is anticipated to increase demand over time, the loss of input tax credits and cost structures that do not decrease proportionately could put pressure on profitability in the short term. Even when consumer product prices decline, profits will be impacted by paying for policy maintenance without the offset of input tax credits. ​

Strategic Response and Market Outlook

SBI General Insurance is giving its individual policyholders the entire benefit of the GST cut in spite of this temporary setback. The company anticipates that higher volumes will somewhat offset the initial impact as more customers buy or renew policies as a result of the lower tax burden, setting up the business and the industry as a whole for stronger long-term development. ​

Industry Expert Opinions

Insurance experts concur that the exemption will increase the appeal of coverage, particularly for cost-conscious middle-class families. In addition to lessening the financial strain on consumers, this policy is seen as a driving force behind increased financial inclusion and security throughout India. ​