GST on Insurance Premiums: Life, Health, and More

Insurance offers peace of mind during life’s uncertainties—but it also comes with taxes that often go unnoticed. Under the Goods and Services Tax (GST) regime in India, different insurance products—like life, health, and general insurance—attract varying tax rates. In this blog, we’ll explain the GST on insurance premiums, including rates for different policies, applicable HSN codes, input tax credit rules, and more.

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    GST Rates

    GST Rate on Insurance Premiums

    The gst on insurance premiums is levied based on the type of insurance policy:

    Type of Insurance GST Rate
    Life Insurance 4.5% to 18% (depends on structure)
    Health Insurance 18%
    General Insurance (motor, property) 18%

    The rate for life insurance varies depending on the premium split between investment and risk cover.

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    GST Structure for Life Insurance

    Life insurance has three billing structures, and GST varies accordingly:

    1. First-year premium (traditional plan): 4.5% GST
    2. Renewal premiums: 2.25% GST
    3. Single premium life policy(risk cover only): 18% GST

    ULIPs (Unit Linked Insurance Plans) and endowment plans that involve investment components may attract 18% GST on service charges.

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    HSN Code for Insurance Services

    All types of insurance services fall under the HSN Code 9971 (financial and related services). More specifically:

    Insurance Type HSN Code GST Rate
    Life Insurance 997131 4.5–18%
    Health Insurance 997133 18%
    Motor/Property Insurance 997132 18%

    These codes must appear on invoices and insurance statements issued by insurers.

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    Can You Claim Input Tax Credit (ITC) on Insurance?

    Businesses:
    • Can claim ITC on general insurance (like fire or asset insurance) if used for business purposes.
    • Can claim ITC on health insurance only if it’s mandatory by law or contractual obligation.
    • Cannot claim ITC on life insurance premiums unless used as a taxable service.
    Individuals:
    • Cannot claim ITC on personal insurance premiums.

    How GST Affects Policyholders

    • Your insurance premium increases by 18% GST in most cases (health and general insurance).
    • Even renewal premiums for life insurance include GST, though at a lower rate.
    • No GST refund is available for personal policyholders.

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    Final Thoughts

    Whether you’re insuring your life, health, or property, it’s important to understand how gst on insurance premiums impacts your policy cost. While life insurance has a tiered structure, most other types come with a flat 18% insurance gst rate. For businesses, knowing the rules around input tax credit on insurance premium can make a big difference in reducing tax liabilities. Always check your premium breakdown and ensure you get proper GST invoices from insurers.

    Frequently Asked Questions (FAQs)

    • What is the GST rate on life insurance premiums?
      It ranges from 4.5% to 18%, depending on the premium type and policy structure.
    • Is GST applicable on health insurance premiums?
      Yes, 18% GST is charged on health insurance premiums.
    • Can a salaried individual claim ITC on insurance premiums?
      No, ITC is not available for personal insurance policies.
    • How does GST affect insurance claims?
      GST is applicable only on the premium paid, not on claim payouts.
    • What is the HSN code for health insurance?
      997133 is the HSN code for health insurance under GST.
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