GST on Life Insurance Premium
Individual life policies pay no GST from 22 September 2025. Group policies still do.
From 22 September 2025, there is no GST on the premium for an individual life insurance policy in India. Term, endowment and ULIP policies are all covered, and so is the reinsurance of those policies. Before that date, the GST Council lists individual life insurance at 18%.
The change is an exemption, not a rate cut. Notification No. 16/2025-Central Tax (Rate), dated 17 September 2025, added life insurance to the list of exempt services in notification 12/2017. Group policies are outside it.
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GST on Life Insurance: Before and After 22 September 2025
Individual life insurance (term, endowment, ULIP)
Before 22 Sept 2025
18% with ITC
From 22 Sept 2025
Exempt (Nil)
Reinsurance of individual life insurance
Before 22 Sept 2025
18% with ITC
From 22 Sept 2025
Exempt (Nil)
Individual health insurance, including family floaters and senior citizen policies
Before 22 Sept 2025
18% with ITC
From 22 Sept 2025
Exempt (Nil)
Group life or group health insurance
Before 22 Sept 2025
Taxable
From 22 Sept 2025
Still taxable: the exemption excludes groups
| Service (heading 9971) | Before 22 Sept 2025 | From 22 Sept 2025 |
|---|---|---|
| Individual life insurance (term, endowment, ULIP) | 18% with ITC | Exempt (Nil) |
| Reinsurance of individual life insurance | 18% with ITC | Exempt (Nil) |
| Individual health insurance, including family floaters and senior citizen policies | 18% with ITC | Exempt (Nil) |
| Group life or group health insurance | Taxable | Still taxable: the exemption excludes groups |
What the Notification Says
Notification 16/2025 inserted three entries into the exemption table of notification 12/2017-Central Tax (Rate).
- Entry 36C: life insurance
- Services of life insurance business provided by an insurer to the insured, where the insured is not a group. Central tax and state tax both Nil.
- Entry 36D: health insurance
- Services of health insurance business provided by an insurer to the insured, where the insured is not a group.
- Entry 36E: reinsurance
- Reinsurance of the services in 36C or 36D. So when an insurer reinsures an individual life policy, the reinsurer's premium is exempt too.
- Individual and family
- The exemption applies to a contract where the insured is an individual, or an individual and the family of that individual. Family includes everyone insured as family in the contract.
- Group (clause zfb)
- A group of persons who join together with a commonality of purpose or for a common economic activity, other than buying insurance. It includes employer-employee groups and non employer-employee groups with a clear relationship to the master policyholder.
Which Policies Pay No GST
- check_circleAn LIC or private insurer's individual term plan.
- check_circleIndividual endowment, money-back and whole life policies.
- check_circleIndividual ULIPs. The GST Council named term, ULIP and endowment policies in its recommendation.
- check_circleA policy covering you and your family under one contract, since family members insured as family count as part of the individual contract.
- check_circleReinsurance of any of the above.
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What Still Attracts GST
- check_circleGroup term insurance taken by an employer for its employees: an employer-employee group is a group under clause (zfb).
- check_circleGroup policies for members of an association or other body with a clear relationship to the master policyholder.
- check_circleOther insurer services that are not life or health insurance to an individual. The exemption covers only entries 36C, 36D and 36E.
How the Change Was Made
- 1
3 September 2025: GST Council
The 56th meeting recommended exempting all individual life and health insurance policies and their reinsurance, to make insurance affordable and widen coverage.
- 2
17 September 2025: notification issued
Notification No. 16/2025-Central Tax (Rate) amended the exemption notification 12/2017. Matching Integrated Tax and Union Territory Tax notifications were issued the same day.
- 3
22 September 2025: in force
The notification came into force on 22 September 2025, the date the Council set for all its service rate changes.
Exam Traps
The relief is an exemption (Nil), not a 0% rate or a 5% rate. It covers individual policies and their reinsurance, not group policies. The notification is 16/2025-Central Tax (Rate) dated 17 September 2025, in force from 22 September 2025; the Council meeting was the 56th, on 3 September 2025. GST is an indirect tax on the premium; it is separate from the income-tax rules on deductions and payouts.
FAQs
Is there GST on LIC premium now?expand_more
Not on an individual policy. From 22 September 2025, life insurance provided to an individual (or an individual and family) is exempt from GST, whether the insurer is LIC or a private company. Group policies are not covered.
What is the GST rate on term insurance?expand_more
Nil for an individual term plan from 22 September 2025. The GST Council's table shows it moving from 18% to exemption. Group term insurance, such as an employer's cover for staff, stays outside the exemption.
Which notification exempted life insurance from GST?expand_more
Notification No. 16/2025-Central Tax (Rate), dated 17 September 2025. It inserted entries 36C (life), 36D (health) and 36E (reinsurance) into notification 12/2017-Central Tax (Rate), with effect from 22 September 2025.
Is GST on life insurance 0% or exempt?expand_more
Exempt. The GST Council listed the change as "18% with ITC" to "Exemption", and the notification puts the rate at Nil in the exemption notification.
Does the exemption cover a family policy?expand_more
Yes, if the insured is an individual and that individual's family under one contract. The notification says family includes everyone insured as family in the contract.
Is GST charged on group term insurance?expand_more
Yes. The exemption applies only where the insured is not a group, and an employer-employee group is a group under the notification's definition.
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