• Before the change, life insurance services were subject to an 18% GST rate, with taxable value determined under product specific valuation rules.
• From 22 September 2025, eligible individual life insurance premiums have no GST component.
• For instalment premiums, the GST treatment depends on the date of premium payment.
• The exemption does not by itself decide your surrender value, which continues to depend on the policy terms and applicable charges.

If you are reviewing your protection or savings needs, compare the cover, policy term and premium before choosing a life insurance plan. You can also get a quote based on your requirements.

For example, under the earlier valuation rules, the value of a life insurance service could be calculated using the gross premium after reducing the investment or savings portion where it was disclosed to the policyholder. For other policies, the taxable value could be 25% of the premium in the first year and 12.5% in subsequent years. Where the entire premium was for risk cover, the valuation rule did not apply.

From 22 September 2025, these eligible individual life insurance services are exempt from GST. The exemption also covers reinsurance of individual life insurance policies. The exemption applies to individual policies, not group life insurance. Group term and group credit life policies continue to attract 18% GST.

For instalment premiums, the GST treatment is based on the date the instalment is paid. Instalments paid before 22 September 2025 attracted 18% GST, while instalments paid on or after that date are exempt.

From 22 September 2025, 0% GST applies to eligible individual life insurance premiums in India. This means individual term insurance, ULIPs and endowment plans no longer include the earlier GST component. Before this change, the applicable life insurance GST rate was 18%, subject to the valuation rules for the policy.

For example, if an eligible individual life insurance premium was Rs. 10,000, an 18% GST would have added Rs. 1,800, making the amount payable Rs. 11,800. With the GST exemption, the same Rs. 10,000 premium does not attract GST, resulting in a Rs. 1,800 saving.

The GST impact on life insurance therefore reduces the tax component for eligible individual policies from 22 September 2025.

The 0% GST on life insurance from 22 September 2025 changes the tax treatment of eligible individual life insurance policies, but it does not automatically increase every policy’s surrender value.

The amount you receive when you surrender a policy depends on its terms, applicable surrender value rules, fund value for linked policies and permitted charges. For ULIPs, the surrender or discontinuance value depends on the policy provisions. The Insurance Regulatory and Development Authority of India (IRDAI) requires applicable surrender value and related terms to be stated in the policy documents.

The GST exemption should therefore not be treated as a separate guarantee of a higher surrender payout. If you are considering surrendering an existing policy, check the applicable surrender value, charges and policy terms before making a decision.

GST treatment changed for eligible individual life insurance policies from 22 September 2025. Before this date, life insurance services generally attracted an 18% GST rate, subject to the applicable valuation rules. Individual term insurance, endowment, ULIP, pension and child insurance plans are now exempt from GST when they qualify as eligible individual life insurance policies.

The GST impact on life insurance therefore depends on the policy structure. Group life insurance policies continue to follow the applicable GST rules and are not covered by this individual-policy exemption.

No. Group life insurance is not exempt from GST under the current rules. From 22 September 2025, the GST exemption applies specifically to individual life insurance policies. Group life insurance, including group term and group credit life policies, continues to attract 18% GST.

So, the current position is:

• Individual life insurance: 0% GST
• Group life insurance: 18% GST
• Group term insurance: 18% GST
• Group credit life insurance: 18% GST

GST is currently exempt on eligible individual life insurance policies from 22 September 2025. This removes the earlier GST component from eligible premiums, but future changes will depend on any amendments or notifications to the applicable GST framework.

For policyholders, the current exemption may:

• Reduce the amount payable: Eligible individual premiums no longer include the earlier GST component.
• Lower the tax component of premiums: More of the amount paid towards an eligible premium goes towards the policy rather than GST.
• Simplify premium comparisons: You can compare life insurance plans based on the premium, cover, policy term and features without adding GST to eligible individual policies.

However, GST is only one factor when choosing a life insurance plan. Your decision should also consider your coverage needs, financial responsibilities, policy terms and applicable tax provisions.

Yes. From 22 September 2025, GST is exempt on eligible individual life insurance policies, including individual term insurance, ULIPs and endowment plans. The exemption removes the earlier GST component from eligible premiums, while group life insurance policies continue to follow the applicable GST rules.

The GST exemption is separate from income tax benefits. Eligible life insurance premiums may qualify for a deduction of up to Rs. 1.5 lakh per financial year under Section 123 of the Income Tax Act, 2025, if you choose the old tax regime and meet the applicable conditions. Eligible death cover payouts may also qualify for tax exemption under Section 11, read with Schedule II, subject to applicable conditions.
 

Note: Tax laws are subject to change. BFL does not provide tax or investment advisory services. Please consult your advisers.

The GST exemption has changed the cost structure of eligible individual life insurance from 22 September 2025. Individual term plans, ULIPs and endowment plans no longer carry the earlier 18% GST, while group term and group credit life policies continue to attract 18% GST.

The change can reduce the tax component of eligible premiums, but GST should not be the only factor when choosing a policy. Consider your life cover requirement, policy term, premium, financial responsibilities and the policy terms before making a decision.