--- title: "New GST on Vehicle Insurance 2026: 18% Rate on Motor, Car" description: "New GST rate on vehicle insurance in 2026 is 18% on car, bike and commercial motor insurance. Busy makes GST compliance easy with automatic rate application." canonical: "https://busy.in/gst-rates/vehicle-insurance/" author: "Vineet Goyal" published: "2025-05-15T12:37:09.000Z" category: "GST Rates" --- - Vehicle insurance premiums now include an 18% GST for both private and commercial vehicles. - The GST applies to all types of vehicle insurance, including third-party, comprehensive, and add-ons like zero depreciation. - Businesses using commercial vehicles can claim Input Tax Credit (ITC) on the GST if the vehicle is used exclusively for business. - Private car insurance does not qualify for ITC, but commercial vehicles for business use and fleet operators can claim it. - When buying or renewing insurance, invoices will show the base price plus 18% GST, and they must include the GSTIN to claim ITC. # New GST on Vehicle Insurance Premiums Buying a vehicle is not complete without insurance. Whether it’s for your personal car or a fleet of commercial vehicles, insurance premiums now include [**Goods and Services Tax (GST)**](https://busy.in/gst/) . This blog breaks down the **vehicle insurance gst rate**, how it’s calculated, and what it means for your expenses. The Government of India is updating GST rates effective after **22 Sep 2025**. Below are the **expected new GST rates** for motor insurance services (no compensation cess). ## **GST on Motor Vehicle Insurance Premium in India** Motor vehicle insurance premiums are taxable under GST. In most cases, private motor insurance, comprehensive motor insurance, and most add-on covers continue at 18% GST. However, third-party insurance of goods carriage is a specific exception and is now taxed at 5% GST with ITC from 22 Sep 2025. ## New GST Rate for Motor Vehicle Insurance | Type of Insurance | New GST Rate (After 22 Sep 2025) | Old GST Rate (Before 22 Sep 2025) | | --- | --- | --- | | Third-party motor insurance for private vehicles | 18% | 18% | | Comprehensive vehicle insurance | 18% | 18% | | Commercial vehicle insurance - general / comprehensive | 18% | 18% | | Third-party insurance of goods carriage | 5% | 12% | | Add-on covers such as engine protect, tyre protect, zero dep, roadside assistance | Generally 18% | Generally 18% | _Notes:_ The 12% slab is discontinued under the rationalised schedule; motor insurance remains at the standard **18%**. Rate applies on the premium (including add-ons) as the taxable value per policy terms. Live Demo Available Today ## Calculate Interest on Overdue Vehicle Insurance Receivables Trusted by 6,00,000+ Users 4.6 Google Rating ## GST on Motor Vehicle Insurance Premium For a normal motor insurance premium taxed at **18% GST**: - Insurance premium: Rs 10,000 - GST @ 18%: Rs 1,800 - Total payable: Rs 11,800 For **third-party insurance of goods carriage** taxed at **5% GST**: - Insurance premium: Rs 10,000 - GST @ 5%: Rs 500 - Total payable: Rs 10,500 So the amount of GST depends on the **type of vehicle** and the **kind of policy**, not just on whether it is called motor insurance. ## **GST on Commercial Vehicle Insurance** Commercial vehicle insurance should be stated carefully: - **Commercial vehicle insurance is not automatically 18% in every case** - **Third-party insurance of goods carriage** is now **5%** - Other commercial motor insurance products, including many comprehensive policies, generally remain at **18%** ## Can You Claim Input Tax Credit (ITC)? ITC on motor insurance is **not available just because the vehicle is used for business**. It depends on the type of vehicle and the applicable GST restrictions. A better version of the table is: | Scenario | Can Claim ITC? | | --- | --- | | Private car insurance for routine business use | No | | Insurance of goods vehicles used for transportation of goods | Yes | | Insurance for fleet / cab operators used for passenger transport | Yes | | Insurance for passenger vehicles used for further supply / dealer use in eligible cases | Yes | | Insurance for employee cars not covered by a specific exception | No | ## About the author **Vineet Goyal** I am a chartered accountant with over 14 years of experience. I understand income tax, GST, and balancing financial records. I analyze financial statements and tax codes effectively. However, I also have a passion for writing, which is different from working with numbers. Recently, I started writing articles and blog posts. My goal is to make finance easier for everyday people to understand. ## Frequently asked questions ### What is the GST on motor vehicle insurance premiums? In most cases, motor vehicle insurance premiums attract **18% GST**. However, **third-party insurance of goods carriage** is a specific exception and is taxed at **5% GST** from 22 Sep 2025. ### Is GST the same for third-party and comprehensive insurance? Not always. For most private vehicle policies, both are generally at 18% GST. But third-party insurance of goods carriage is now taxed at 5% GST, so the answer is no longer a blanket yes. ### What is the GST on commercial vehicle insurance? Yes. GST on commercial vehicle insurance is **18%**, and ITC can be claimed if used for business. ### Can businesses claim ITC on motor insurance? You must be GST-registered, use the vehicle for business, and ensure the invoice has your GSTIN. ### Do add-on covers attract GST? Yes. Add-on covers that form part of the motor insurance policy premium are generally taxed along with the policy. 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