GST on Life Insurance in India

From 22 September 2025, all individual life insurance policies, including term insurance and ULIPs, are exempt from GST. Earlier, policyholders had to pay 18% GST on these plans. This exemption will help families save money every year and make financial protection more affordable.

From 22 September 2025, all individual life insurance policies, including term insurance and...

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What is GST?

GST stands for Goods and Services Tax. It is a single tax on goods and services introduced in India on July 1, 2017. Before GST, people and businesses had to pay many different taxes at the state and central levels. These included Service Tax, Value Added Tax (VAT) and others. All of these were merged into one simple tax called GST.

GST makes pricing clearer by removing multiple layers of taxation, which helps both customers and businesses. In life insurance, premiums earlier included 18% GST, which made them costlier. By removing it, the cost is lower, and more people can now afford life cover.

What Changed in GST for Life Insurance Premiums in India

The GST exemption is a direct benefit for policyholders. People who take coverage of 50 lakh term insurance, 1 crore term insurance, or more can save thousands every year. Individual life insurance premiums are exempt from GST starting September 22, 2025. Here are the current GST rates across different life insurance plan types:

Life Insurance Plan Type	Current GST Rate

Term Insurance Policies	0%
ULIPs (Unit Linked Insurance)	0%
Endowment Plans	0%

Effective Date of Zero GST and Who Is Eligible (Individual Policies Only)

The effective date of this GST change is 22 September 2025. If you buy or renew your term insurance after this date, 0% GST applies.

Eligible: Individual life insurance policies (term, ULIP, traditional).
Not Eligible: Group insurance, employer-sponsored covers, or corporate policies.

Here’s how it applies in real life:

Renewals: If your renewal date is on or after 22 September 2025, you benefit from No GST on term insurance.
New Purchases: Any new life or term insurance policy purchased after this date comes with Zero GST on term insurance by default.

Here’s an example of how 0% GST lowers your term insurance premiums

Base premium = ₹12,000
Earlier cost = ₹14,160 (with GST)
New cost = ₹12,000 (0% GST)
Yearly savings = ₹2,160

Over a 20-year policy, you save more than ₹40,000. This makes term insurance 2025 one of the cheapest and most value-for-money protection products.

Tax Benefits on GST-Free Life Insurance Premiums

Even with GST now at 0%, the tax benefits on life insurance premiums still remain under the old tax regime.

Section 80C

You can claim deductions on your premium up to ₹1.5 lakh.

Section 10(10D)

Payouts (death or maturity) are tax-free under the rules.

So, you save both ways with No GST on term insurance and strong tax deductions.

Conclusion

The removal of 18% GST on life insurance premiums is a major benefit for policyholders in India. This means lower premiums, direct yearly savings, and wider access to financial protection. For families, this is the right time to buy or renew a term insurance policy. With Zero GST on term insurance, premiums are cheaper, while tax benefits under Section 80C and 10(10D) continue. Overall, no GST on term insurance makes protection plans more affordable and attractive in 2025.

FAQs on GST-Free Life Insurance Premiums

Is life insurance GST free now?

Yes, from September 22, 2025, individual life insurance premiums are fully exempt from GST.

From when is GST removed on life insurance premiums?

GST will be removed from 22 September 2025. From this date, all individual life insurance policies will have 0% GST.

Is term insurance premium GST-free now?

Yes. From 22 September 2025, all individual term insurance premiums are fully GST-free.

Does the GST exemption affect income tax benefits?

No. You still get tax deductions under Section 80C for premiums paid. Also, payouts remain tax-free under Section 10(10D).

Why did the government remove GST on life insurance premiums?

With 0% GST, the government aims to make life insurance cheaper and more affordable. This change is meant to reduce costs and help more families buy term insurance and life cover.

What was the GST rate on life insurance before the 2025 update?

Before the September 2025 update, life insurance premiums attracted GST at 18% on most plans, including term insurance policies.

Written by Neviya Laishram

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Reviewed by Vaibhav Kumar Kaushik

A senior editor with years of expertise, she fine-tunes content that connects, converts, and builds trust. She transforms heavy life insurance concepts into clear, aha-moment reads. Writing is her passion, and thinking ahead is second nature. When not wrangling words, she’s crushing game levels because every challenge is a puzzle waiting to be solved.