New GST on Vehicle Insurance Premiums
- The gst on vehicle insurance is generally 18% for private and passenger vehicle insurance, subject to the type of policy and vehicle.
- Comprehensive insurance, own-damage cover, and most passenger-vehicle insurance services generally attract 18% GST.
- Third-party insurance for goods carriage vehicles attracts 5% GST from 22 September 2025 under the applicable GST entry.
- Businesses can claim eligible Input Tax Credit (ITC) on motor insurance only where permitted under GST rules; eligibility depends on the type and use of the vehicle.
- A valid GST tax invoice and other applicable ITC conditions must be met before claiming credit.
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) . 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).
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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
The vehicle insurance gst rate old and new varies by policy type. Most motor insurance remains at 18%, while third-party insurance of goods carriage was reduced from 12% to 5% from 22 September 2025.
| 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% |
Type of Insurance
New GST Rate
(After 22 Sep 2025)
Old GST Rate
(Before 22 Sep 2025)
Type of Insurance
New GST Rate
(After 22 Sep 2025)
Old GST Rate
(Before 22 Sep 2025)
Type of Insurance
New GST Rate
(After 22 Sep 2025)
Old GST Rate
(Before 22 Sep 2025)
Type of Insurance
New GST Rate
(After 22 Sep 2025)
Old GST Rate
(Before 22 Sep 2025)
Type of Insurance
New GST Rate
(After 22 Sep 2025)
Old GST Rate
(Before 22 Sep 2025)
Note: Most motor insurance services continue to attract 18% GST. However, third-party insurance of goods carriage was reduced from 12% to 5% with ITC from 22 September 2025. The applicable rate depends on the type of motor insurance service.
Calculate Interest on Overdue Vehicle Insurance Receivables
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 GST amount depends on the type of vehicle, type of insurance policy, and applicable GST rate.
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 |
Scenario
Can Claim ITC?
Scenario
Can Claim ITC?
Scenario
Can Claim ITC?
Scenario
Can Claim ITC?
Scenario
Can Claim ITC?
