Written by : Knowledge Centre Team
2026-01-22
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6 minutes read
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Until recently, Goods and Services Tax (GST) applied to almost every sector and service, including Life Insurance, unless otherwise exempted by the GST Law. For years, policyholders paid 18% GST on their life insurance premiums, which marginally reduced the net returns on investment-linked plans.
However, in a major relief to customers, the 56th GST Council meeting on September 3, 2025, announced the removal of GST on individual life and health insurance premiums, effective September 22, 2025. This means policyholders now pay only the base premium, with zero GST.
What Does This Change Mean for You?
Lower Premium Outgo: The amount you pay is now exactly the base premium, without the earlier 18% GST.
Better Returns: For investment-linked insurance products, the absence of GST improves overall returns, since every rupee goes directly into your policy benefits.
Simpler Payments: You no longer need to account for tax adjustments on premium payments.
Save Taxes While Building Long-Term Wealth
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Impact on Popular Insurance Plans
Let us look at the impact of the new reform on different insurance plans:
Term Insurance Plans
Term plans are pure protection products. Earlier, the entire premium was taxed at 18% GST. For example, if your annual premium was ₹10,000, you paid ₹11,800 including GST.
Now, you pay only ₹10,000, saving you ₹1,800 every year.
Investment-Oriented Plans (ULIPs, Endowment)
Earlier, GST was charged only on the protection part of investment plans, so the tax was lower than term insurance. However, now, with zero GST, your entire premium goes into savings and investments without any tax cut.
Health Insurance Riders
Health riders attached to life insurance policies also benefit from this change, as premiums for these are no longer taxed.
The GST exemption makes insurance more affordable and investment-linked policies more rewarding. Whether you’re securing your family’s future with a term plan or building wealth through ULIPs or endowment policies, you now pay only the actual premium, no extra tax.
Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.
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Tax Savings - Top Selling Plans
We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.
Family Shield: Enhanced Protection
iSelect Smart360 Term Plan
- 3 Plan options
- Life cover till 99 years
- Steady income benefit
- Block your premium at inception
Fixed Returns, Zero Risks & Worries
iSelect Guaranteed Future Plus
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- Life cover + Guaranteed benefits
- Accidental death benefit
- Premium protection cover
Start Young, Pay Less, Stay Secured
Young Term Plan
- Life cover till 99 years
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- Block your premium rate
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