Simplifying Life Insurance in India

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0% GST on Your Life Insurance Premiums

In September 2025, the GST Council and Central Board issued changes that make individual life insurance premiums (and individual/family health insurance) nil-rated, i.e., effectively 0% GST for non-group policies, with effect from September 22, 2025.

This article explains what that means, who benefits, what doesn’t change, why it matters, and practical steps for buyers, agents and insurers, all in plain language.

Is GST Applicable on Life Insurance Premiums?

As of September 22, 2025, GST is no longer applicable in life insurance premiums in India. The government has removed the 18% Goods and Services Tax from individual life insurance policies.

0% GST applies to premiums paid on or after this date. This includes term plans, ULIPs, endowment policies, annuities, and riders purchased by individuals. Whether buying a new policy or renewing an existing one, the premiums are GST-free.

Earlier, GST rates varied across different policy types and added to the total cost. Now, the price shown by insurers is the final amount you pay, no extra tax added. This makes life insurance more affordable and easier to understand. It benefits both new and existing policyholders by reducing financial burden.

Before and After GST Rates on Different Life Insurance Policies

A quick comparison of how GST applied to different life insurance policies before and after the rule change effective September 22, 2025.

Policy Type	Previous GST Rate	Current GST Rate (0%)
Term Insurance (taken by an individual)	18%	0%
ULIP (where the insured is an individual)	18%	0%
Insurance Riders	18%	0%
Endowment (First Year)	4.50%	0%
Endowment (Renewals)	2.25%	0%
Single Premium Annuity	1.80%	0%

The exemption applies where the insured is not a group or employee-benefit policy. Group insurance policies are treated differently and are generally outside this exemption unless specifically notified otherwise.

The 0% GST benefit also applies to existing policyholders who purchased before or after September 22, 2025. So, even if your policy started earlier, you’ll still enjoy the tax-free benefit from your next renewal onward.

Benefits of Removing GST on Life Insurance Policy

Removing GST on life insurance makes policies more affordable and encourages wider financial protection for individuals:

Individual Policyholders

If you buy or renew an individual life insurance policy, you no longer pay 18% GST on the premium component that was earlier taxed. That is an immediate visible saving on the premium invoice.

Reduced Premium Costs

Policy buyers can now pay only the base premium, with no additional tax. For example, a term insurance policy premium that earlier cost ₹11,800 per year (i.e, ₹10,000 + ₹1,800 GST) will now cost ₹10,000 per year; no extra cost will be applicable.

Clearer Pricing Structure

With 0% GST on life insurance, pricing is straightforward and transparent. The premium shown is the exact amount you pay, with no hidden taxes or extra charges.

Increased Long-Term Savings

0% GST on life insurance policies can help you save from the GST exemption, which can be invested elsewhere or used for other expenses. boosting your overall financial position, especially long-term investment plans.

Policyholders pay less over the full duration of their life insurance policy. With 0% GST, each premium is lower, and over time, especially for long-term plans like ULIPs or endowment policies, this results in significant overall savings.

Improved Affordability for Families

Lower premium amounts make it easier for middle-income households to purchase or continue life insurance coverage without financial strain. The rider offers high value for minimal cost, especially when bundled with a parent’s term or whole life policy.

Equal Benefit for NRIs

Non-Resident Indians (NRIs) also enjoy the 0% GST benefit on individual life insurance policies purchased in India. This applies to all policy types and payment methods (NRE, NRO, or Indian accounts), including renewals after September 22, 2025. However, GST paid before this date is not refundable.

Which Life Insurance Policies and Cases are Excluded from 0% GST?

These are the cases or policy types that do not get the zero GST exemption:

1. Group Life Insurance Policies

If the insured is a group (for example, employer-employee group life cover or group life policies), then these policies are not eligible for the exemption. These continue to attract the old rate of 18% GST, as the benefit applies only to individual policies.

2. Group Term Insurance / Group Credit Life Policies

Policies such as group term insurance or group credit life insurance are explicitly excluded from the 0% GST benefit. Even after the reform, they remain taxed at 18% GST.

3. Policies with Premiums Paid or Due Before 22 Sept 2025

Premiums invoiced or paid before 22 September 2025 will continue to attract 18% GST, even if the policy is renewed later. The 0% GST exemption applies only when payment, invoicing, and risk commencement meet the new criteria.

4. Advance Premiums Paid Before Effective Date

Any portion of premium paid in advance before 22 Sept may still attract GST, depending on the invoice/payment/risk start date.

5. Premium Instalments Due Before 22 Sept 2025

Instalments falling before the effective date are not eligible for the exemption and will be taxed at 18%

How to Check If Your Life Insurance Policy Qualifies for 0% GST?

Confirm whether your policy is an individual/personal life policy or a group policy. The exemption applies to individual policies (non-groups).
For renewals and new purchases made on or after Sept 22, 2025, your premium invoice should show GST as nil or show exemption. If it does not, ask the insurer or agent for written clarification.
If you’re thinking of delaying a renewal to get the nil rate, be cautious. Effective date and risk commencement rules matter; sometimes, eligibility depends on when the risk starts, not just when you pay. Check insurer guidance before postponing.
Ask for written confirmation from the insurer/agent about how the premium calculation changed and whether commission or other charges have been adjusted.
If you are an investor in ULIP or savings-oriented policies, confirm whether the structural pricing (fund charges, policy administration) has changed; not every internal charge necessarily falls under the GST exemption.

Can You Claim Tax Benefits on Life Insurance Premiums After GST Removal?

Yes, you can continue to claim tax benefits on life insurance premiums even after the removal of GST. The GST exemption, effective from September 22, 2025, lowers the overall cost of individual life insurance policies but does not impact income tax deductions under the Income Tax Act.

Premiums paid for eligible life insurance plans, such as term insurance, ULIPs, endowment policies, annuities, and riders, still qualify for deductions under Section 80C, up to ₹1.5 lakh per financial year. This means policyholders can enjoy both reduced premium costs due to 0% GST and the existing tax benefits on those payments.

With the removal of GST on life insurance premiums, customers now have a better understanding and a more affordable path to securing financial protection for themselves and their families.

Whether you're purchasing a new policy or renewing an existing one, the benefits are immediate, lower costs, simplified pricing, and continued eligibility for tax deductions under Section 80C.

This change empowers individuals to make smarter insurance choices and signals a positive shift in the industry, making life insurance more accessible to a broader population, including NRIs.

FAQs about GST on Life Insurance Policy

Is every life insurance policy now GST-free?

No, the exemption applies to individual (non-group) life insurance policies as per the GST Council/CBIC language. Group policies typically remain outside this exemption unless separately notified.

Will premiums fall immediately for everyone?

You should see GST removal on your invoice; however, insurers may adjust premiums or commissions to manage lost ITC. So the full cash saving may not always be passed to policyholders.

If I paid the premium before Sept 22, 2025 and renewed after, can I claim a refund of GST?

Not automatically. Refund rules are technical, whether you can claim depends on invoicing date, payment date, policy risk commencement and insurer processes. Contact your insurer or check CBIC guidance for refund/adjustment processes.

Will 0% GST in my insurance affect my tax-saving under Section 80C or other sections?

GST is a consumption tax; income-tax benefits (like Section 80C deductions for certain life policies) are separate. The exemption from GST does not change the income-tax rules for deductions; those rules remain governed by the Income-tax Act. Consult a tax advisor for personal tax planning.

Is GST on life insurance premiums deductible under income tax?

Yes, the entire premium amount, including GST, is deductible under Section 80C, up to ₹1.5 lakh per year, if the policy qualifies. Keep receipts showing GST for proof.

What is the impact of GST on endowment plans?

Earlier, endowment plans had GST of 4.5% in the first year and 2.25% on renewals. From 22nd September 2025, GST on individual life insurance policies is 0%, making premiums cheaper and returns better.

Will the GST exemption apply to group life insurance policies provided by employers?

No, the GST exemption currently applies only to individual life insurance policies. Group insurance policies, such as those offered by employers to employees, may still attract GST depending on the structure and who bears the premium cost. Customers should check with their insurer or employer for specific details.

What happens to policies purchased before 22 September 2025? Will future premiums be GST-free?

Yes, suppose you had purchased a life insurance policy before 22 September 2025. In that case, all future premiums paid after this date will be GST-free, provided the policy qualifies as an individual life insurance plan. However, GST paid on premiums before this date will not be refunded.

Can businesses claim input tax credit on life insurance premiums for employees?

Generally, input tax credit (ITC) is not available on life insurance premiums paid for employees unless it is mandated by law (e.g., under labor regulations). With the GST exemption now in place for individual policies, ITC is no longer applicable for such premiums. Businesses should consult their tax advisor for case-specific guidance.

Does the 0% GST apply to all types of life insurance policies?

Yes, all individual life insurance policies are covered under the 0% GST rule. This includes term plans, ULIPs, endowment policies, annuity plans, and riders. Group insurance policies and non-individual plans are not included.

Is the GST exemption applicable to policies purchased through banks or agents?

Yes, the GST exemption applies regardless of the purchase channel. Whether you buy your policy online, through a bank, an agent, or a third-party portal, the 0% GST benefit remains the same.

What happens if I paid GST on a premium just before the reform date?

If you paid your premium before September 22, 2025, GST was applicable at the old rate. Unfortunately, there is no refund for GST paid before the exemption came into effect.

Does the GST exemption affect the sum assured or policy benefits?

No, the GST exemption only affects the pricing of the premium. The sum assured, coverage, and policy benefits remain unchanged.

Can businesses still claim input tax credit on life insurance premiums?

Yes, the businesses registered under GST may still be eligible to claim input tax credit if the insurance policy is purchased for business purposes. This does not apply to individual policyholders.

Does GST exemption apply to both online and offline life insurance purchases?

Yes. The GST exemption on life insurance premiums applies regardless of how you buy the policy, online, through an app, or via an agent or bank. The 0% GST benefit remains the same across all purchase methods.

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