GST on life insurance from 22 September 2025: term, ULIP and endowment premiums

From 22 September 2025, premiums on individual life insurance policies in India are exempt from GST. This covers term plans, ULIPs, endowment and money-back policies, whole life plans and the reinsurance of such policies. The exemption was recommended at the 56th meeting of the GST Council in September 2025 and took effect with the other rate changes on 22 September 2025. Before that, a term plan premium carried 18% GST, and traditional savings policies carried lower effective rates. Group life insurance, such as an employer's group term policy, is outside the individual exemption. If a 2026 premium receipt for your own policy still shows a GST line, ask the insurer in writing why.

This guide belongs to the overview of life insurance in India.

What GST used to be, and what it is now

The earlier rates for savings policies were effective rates that came from valuation rules for the insurance service element. They no longer matter for individual policies but explain why the saving you see at renewal differs between products.

Worked example: what the exemption saves

Illustrative. A term plan has a base premium of ₹15,000 a year.

The saving is ₹2,700 a year, about 15.3% of the old total (2,700 ÷ 17,700). Over a 30-year policy at the same base premium that is ₹81,000 in nominal terms.

Illustrative endowment policy. Base premium ₹1,00,000. Under the old effective rates GST was ₹4,500 in the first year and ₹2,250 in later years. The exemption saves ₹2,250 a year from the second year onwards, a smaller share of the premium than on a term plan.

Why your premium may not fall by the full 18%

Insurers pay GST on many of their own costs: commissions to distributors, rent, IT and other services. When they charged GST on premiums, they could set this input tax credit against the GST they collected. An exempt supply does not allow input tax credit, so the GST on their costs became a cost for the insurer. Some insurers therefore revised base premiums or commissions after the change.

What this means for you:

• On an existing policy, the base premium is fixed by the policy contract, so the GST saving should flow through at renewal.
• On a new policy, compare the total you pay today. A quote from early 2025 that showed ₹15,000 + GST is not a reliable guide to a 2026 quote.
• Compare base premium to base premium when you look at an older policy, and total to total when you look at new quotes.

Timing around the changeover

Premiums falling due around 22 September 2025 were treated according to the time of supply rules in the CGST Act, which look at the dates of invoice and payment. For any premium on an individual policy paid in 2026, the exemption applies. If you paid a single premium or an advance premium before 22 September 2025, the GST charged then is generally not refunded.

Employer group cover and loan-linked cover

Group term life bought by an employer, a lender or an association remains taxable. Two situations where this matters:

1. Voluntary top-up on an employer group policy. If the employer asks you to pay for extra cover, your contribution may include GST. A personal term plan for the same cover is now GST-exempt and stays with you if you leave the job.
2. Loan protection cover sold with a home loan. Where this is a group policy held by the lender, GST may apply, and the single premium is often added to the loan, so you also pay interest on it. Compare it with your own term plan, as explained in the buying checklist.

Effect on the old-regime tax deduction

Under the old tax regime, the deduction for life insurance premiums (formerly Section 80C of the 1961 Act) is based on the premium paid, subject to the overall limit of ₹1.5 lakh and the condition linking premium to sum assured. With no GST, the amount paid and therefore the deduction claimed is lower for the same policy. Under the new regime, which is the default, there is no such deduction. See tax on life insurance payouts.

Renewal checklist

• Check the premium receipt or renewal notice: an individual policy should show no GST from 22 September 2025.
• Compare this year's base premium with last year's. For a level term plan it should be unchanged.
• If GST appears, ask the insurer whether the policy is classed as a group policy, and get the answer in writing.
• If the insurer does not resolve it, use the grievance route in the Insurance Ombudsman guide.
• For new cover, compare total premiums using the term quote comparison tool.

GST is one part of what you pay; the bigger drivers are covered in the premium factors guide. Note that the exemption does not change how payouts are taxed: see tax on life insurance payouts.

Frequently asked questions

Does the exemption apply to policies bought before 22 September 2025?

Yes, to premiums paid from that date on individual policies, whenever the policy was first bought.

Is GST charged on the payout I receive?

No. GST applies to the premium for the insurance service. Claim and maturity payouts are not subject to GST. Income tax may apply to some maturity proceeds.

My ULIP statement still shows charges. Is that GST?

Charges such as fund management and mortality charges continue. GST that used to be levied on those charges should no longer appear for an individual ULIP. Check the charge breakdown in the annual statement.

Sources

• GST Council — recommendations of the 56th meeting and rate notifications effective 22 September 2025
• Central Board of Indirect Taxes and Customs — notifications and clarifications on GST exemptions
• IRDAI — circulars to insurers on implementing the change