From 22 September 2025, individual term insurance premiums will no longer attract GST. Earlier, policyholders had to pay 18% GST on term plans, which made premiums higher. With the new update, the GST rate is cut from 18% to 0%, making financial protection much cheaper and easier for families.
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GST on term insurance premiums is the tax charged on your policy premium under the Goods and Services Tax system. GST on term insurance premiums was earlier set at 18%; however, from 22 September 2025, you won’t have to pay GST on term insurance. That’s the real benefit of zero GST term insurance in 2025.
Let’s take a simple example:
Over a 20-year plan, that’s more than ₹40,000 saved. That’s the clear benefit of zero GST term insurance.
The government removed GST on term insurance to make financial protection easier for everyone. Here are the main reasons:
Earlier, the 18% GST made premiums higher. A plan that cost ₹10,000 became ₹11,800 with tax. With Zero GST on term insurance, the amount you pay now goes only toward your cover, not extra charges. This makes it easier for young families and middle-class households to buy protection.
The idea behind No GST on term insurance is simple: life cover should be affordable, transparent, and within reach of more Indians. Removing GST reduces the barrier of cost and motivates more people to secure their families.
India has low insurance penetration compared to many countries. By removing GST, it encourages wider adoption and better financial security for families.
The removal of GST on term insurance is great news for families. It makes protection simpler, cheaper, and more accessible. Here’s how it helps everyday families:
With Zero GST on term insurance, you save thousands of rupees every year.
More families can now afford protection. It also encourages first-time buyers to start their financial journey with term insurance.
Over the years, these savings add up to a large amount, making term insurance one of the most cost-effective ways to secure your family.
The new GST rule will start from 22 September 2025.
Individual term insurance policies. If you buy a new term plan or renew after this date, it will be term insurance GST free from September 2025.
Group covers, employer-sponsored policies, or corporate term plans remain outside this benefit.
The removal of GST on term insurance is a big step for families in India. With zero GST on term insurance, families can now put their money fully toward cover instead of tax, and over time, the savings add up to a big amount. This change makes term insurance one of the most affordable and value-for-money ways to secure your loved ones. If you’ve been considering term insurance, the GST change makes it easier to take that step toward protecting your loved ones.
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Reviewed by Vaibhav Kumar Kaushik 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
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