{"id":12600,"date":"2024-09-20T03:48:21","date_gmt":"2024-09-19T22:18:21","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=12600"},"modified":"2025-09-30T12:20:13","modified_gmt":"2025-09-30T06:50:13","slug":"gst-on-lic-premium","status":"publish","type":"post","link":"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/","title":{"rendered":"GST on LIC Premium: GST Rate For LIC Policies &#038; GST Exemptions"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d1cc6a0c8d2\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d1cc6a0c8d2\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/#Understanding-GST-on-Life-Insurance-Premiums\" >Understanding GST on Life Insurance Premiums<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/#Latest-GST-Rates-for-LIC-Insurance-Policy-Premiums\" >Latest GST Rates for LIC Insurance Policy Premiums<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/#GST-on-Premiums-for-LIC-Term-Plans\" >GST on Premiums for LIC Term Plans<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/#GST-on-Premiums-for-LIC-Endowment-Plans\" >GST on Premiums for LIC Endowment Plans<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/#GST-on-LIC-Pension-Plans-or-Annuities\" >GST on LIC Pension Plans or Annuities<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/#GST-on-LIC-Unit-Linked-Insurance-Plans-ULIPs\" >GST on LIC Unit Linked Insurance Plans (ULIPs)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/#GST-on-LIC-Health-Insurance-Plans\" >GST on LIC Health Insurance Plans<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/#GST-on-Other-Components-of-LIC-Policies\" >GST on Other Components of LIC Policies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/#GST-Exemptions-for-LIC-Premiums\" >GST Exemptions for LIC Premiums<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/#Availability-of-Input-Tax-Credit-on-GST-for-LIC-Premiums\" >Availability of Input Tax Credit on GST for LIC Premiums<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/#Place-of-Supply-for-GST-on-LIC-Premiums\" >Place of Supply for GST on LIC Premiums<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/#SAC-Codes-for-Insurance-Policies\" >SAC Codes for Insurance Policies<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/#Key-Advance-Rulings-on-GST-for-LIC-Premiums\" >Key Advance Rulings on GST for LIC Premiums<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/razorpay.com\/learn\/gst-on-lic-premium\/#Frequently-Asked-Questions\" >Frequently Asked Questions<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Understanding-GST-on-Life-Insurance-Premiums\"><\/span><strong>Understanding GST on Life Insurance Premiums<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-[20px] text-message flex w-full flex-col items-end gap-2 whitespace-pre-wrap break-words [.text-message+&amp;]:mt-5 overflow-x-auto\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"7dd26092-120a-43c2-83dc-baa5a1714c74\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<p data-pm-slice=\"1 1 []\"><span style=\"font-weight: 400;\">Starting September 2025, GST is no longer applicable on individual LIC life and health insurance policies. The earlier structure -where LIC life insurance premiums attracted 4.5% GST, term and health plans were taxed at 18%, and endowment or annuity plans had 4.5% GST in the first year &#8211; has been replaced with a 0% GST rate for all individual insurance products. However, group and corporate insurance policies will continue to attract 18% GST<\/span><\/p>\n<p>It&#8217;s important to note that under GST, LIC premiums are taxed differently depending on the type of policy. For Term Plans, Endowment Plans, Pension Plans, and ULIPs, GST is applied only to the life coverage portion. While Term Plans are fully taxable, Endowment and ULIP plans incur GST only on the risk component, with the investment or savings portion remaining exempt.<\/p>\n<p><em><b>Related Read: <\/b><a href=\"https:\/\/razorpay.com\/learn\/gst-on-insurance-premium\/\"><b>GST on Insurance Premiums<\/b><\/a><\/em><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<h2><span class=\"ez-toc-section\" id=\"Latest-GST-Rates-for-LIC-Insurance-Policy-Premiums\"><\/span><b>Latest GST Rates for LIC Insurance Policy Premiums<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The <a href=\"https:\/\/razorpay.com\/learn\/gst-rates-goods-and-service-tax-rates-slabs\/\">GST rates<\/a> for different LIC life insurance and health policies are outlined below:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Type of LIC Policy<\/b><\/td>\n<td><b>GST Charged On<\/b><\/td>\n<td><b>Updated GST Rate (Sep 2025)<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">LIC Term Insurance and Riders<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Premium<\/span><\/td>\n<td><b>0%<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">LIC Health Plans<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Premiums<\/span><\/td>\n<td><b>0%<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">LIC Life Insurance \/ Endowment Plans (New Business Premium including single premium)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Premium<\/span><\/td>\n<td><b>0%<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">LIC Pension Plans (New Business Premium including single premium)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Premium<\/span><\/td>\n<td><b>0%<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">LIC Annuity Plans with a Single Premium<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Premium<\/span><\/td>\n<td><b>0%<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">LIC Annuity Plans \u2013 First Year Premium<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Premium<\/span><\/td>\n<td><b>0%<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">ULIPs (Unit Linked Insurance Plans)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Charges<\/span><\/td>\n<td><b>0%<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Renewal Premium of LIC\u2019s Life, Pension, and Annuity Plans<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Premiums<\/span><\/td>\n<td><b>0%<\/b><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p class=\"paragraphBu\">\n<p class=\"paragraphBu\"><span style=\"font-weight: 400;\">Now, let us understand the GST rates on LIC premiums in detail.\u00a0\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"GST-on-Premiums-for-LIC-Term-Plans\"><\/span><b>GST on Premiums for LIC Term Plans<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">0% GST is applied to the entire premium amount of LIC term life insurance. Term plans are the most affordable form of life insurance, as they only cover mortality costs, meaning the entire premium is subject to this 18% GST rate<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"GST-on-Premiums-for-LIC-Endowment-Plans\"><\/span><b>GST on Premiums for LIC Endowment Plans<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The GST on LIC\u2019s endowment plan premiums varies depending on the year of payment. For the first-year premium, a GST rate of 0% is applied, while premiums paid in subsequent years attract a lower GST rate of 0%.<\/span><\/p>\n<p><em><strong>Related Read: <a href=\"https:\/\/razorpay.com\/learn\/gst-on-insurance-premium\/\">GST on Insurance Premiums: Impact, Tax Savings, and More<\/a><\/strong><\/em><\/p>\n<h2><span class=\"ez-toc-section\" id=\"GST-on-LIC-Pension-Plans-or-Annuities\"><\/span><b>GST on LIC Pension Plans or Annuities<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>For LIC pension plans or annuities, GST rates depend on the premium payment method. Regular premium pension plans attract a GST of 0% on the risk protection component of the policy. In contrast, single premium annuity plans, where you make a one-time payment for annual post-retirement income, incur a lower GST rate of 0%.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"GST-on-LIC-Unit-Linked-Insurance-Plans-ULIPs\"><\/span><b>GST on LIC Unit Linked Insurance Plans (ULIPs)<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A GST rate of 0% is applied to charges associated with ULIPs, such as fund management fees, premium allocation, policy administration, and mortality charges, rather than on the premium itself.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This is because ULIP premiums are divided into two parts: one is invested in market-linked funds, which are exempt from GST, and the other covers insurance. The 0% GST applies only to service-related charges, ensuring the investment portion remains tax-free.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"GST-on-LIC-Health-Insurance-Plans\"><\/span><b>GST on LIC Health Insurance Plans<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">LIC health insurance plans, whether individual or family, are subject to an 0% GST.\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"GST-on-Other-Components-of-LIC-Policies\"><\/span><b>GST on Other Components of LIC Policies<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">In addition to the premiums, several other components of LIC policies are subject to GST. These include:<\/span><\/p>\n<h3><b>1) GST on Late Fees<\/b><b><br \/>\n<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">A GST rate of 18% is applied to interest charges incurred due to delayed premium payments. However, no GST is applicable to late fees for policies that are exempt from GST.<\/span><\/p>\n<h3><b>2) GST on Cheque Dishonour Charges (CDA)<\/b><b><br \/>\n<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">An 18% GST is also charged on cheque dishonour charges (CDA), including any associated postage costs.<\/span><\/p>\n<div class=\"block_content_wrapper\">\n<div class=\"flex max-w-full flex-col flex-grow\">\n<div class=\"min-h-[20px] text-message flex w-full flex-col items-end gap-2 whitespace-pre-wrap break-words [.text-message+&amp;]:mt-5 overflow-x-auto\" dir=\"auto\" data-message-author-role=\"assistant\" data-message-id=\"095c2719-4371-4995-9223-c139a206973d\">\n<div class=\"flex w-full flex-col gap-1 empty:hidden first:pt-[3px]\">\n<div class=\"markdown prose w-full break-words dark:prose-invert light\">\n<h3><b>3) GST on Charges Recovered from Policyholders<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">In addition to premiums, certain administrative charges levied on policyholders are also subject to GST. These charges include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Alteration fees<\/b><span style=\"font-weight: 400;\">: For making policy changes, like adding or removing beneficiaries.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Quotation fees<\/b><span style=\"font-weight: 400;\">: For providing insurance quotes.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Duplicate policy preparation charges<\/b><span style=\"font-weight: 400;\">: For issuing duplicate copies of the policy.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Written acknowledgment charges<\/b><span style=\"font-weight: 400;\">: For registering actions like change of nomination or policy cancellation.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">These charges typically attract a GST rate of 18%, though the rate may vary based on the specific charge and applicable regulations.<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<h2><span class=\"ez-toc-section\" id=\"GST-Exemptions-for-LIC-Premiums\"><\/span><b>GST Exemptions for LIC Premiums<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">As per <a href=\"https:\/\/cbic-gst.gov.in\/hindi\/pdf\/central-tax-rate\/Notification12-CGST.pdf\" target=\"_blank\" rel=\"noopener\">Notification No. 12\/2017<\/a>, dated 28th June 2017, the following insurance services and schemes are exempt under the GST regime:<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Insurance services provided by Insurance Regulatory and Development Authority (IRDAI)<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Annuity plans under the National Pension Scheme (NPS) regulated by PFRDA<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Life insurance services provided under government-run schemes, such as &#8211; <\/span><span style=\"font-weight: 400;\">Janashree Bima Yojana (JBY)<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Varishtha Pension Bima Yojana (withdrawn in 2015-16)<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Pradhan Mantri Jeevan Jyoti Bima Yojana<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Pradhan Mantri Jan Dhan Yojana<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Aam Aadmi Bima Yojana (AABY)<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Pradhan Mantri Vaya Vandana Yojana<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Life micro-insurance items with a maximum cover of Rs. 2 lakhs, as approved by the IRDAI\u00a0<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Any other insurance scheme of the state governments as notified by the Indian government on the recommendation of the GST Council.<\/span><\/li>\n<\/ul>\n<p><em><b>Related Read: <\/b><\/em><em><a href=\"https:\/\/razorpay.com\/learn\/gst-exemption\/\"><b>GST Exemption: List of Goods and Services Exempt Under GST<\/b><\/a><\/em><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Availability-of-Input-Tax-Credit-on-GST-for-LIC-Premiums\"><\/span><b>Availability of Input Tax Credit on GST for LIC Premiums<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Under the GST regime, registered taxpayers generally have the option to claim Input Tax Credit (ITC) on the GST paid for their business-related goods and services. However, there are specific restrictions regarding LIC premiums:<\/span><\/p>\n<h3><b>1) Individual Policyholders:<\/b><\/h3>\n<p><span style=\"font-weight: 400;\">Individual policyholders cannot claim ITC on GST paid for LIC premiums. This is because LIC policies are intended for personal consumption rather than business use.<\/span><\/p>\n<h3><b>2) Corporate Policyholders:<\/b><\/h3>\n<p><b><br \/>\n<\/b><span style=\"font-weight: 400;\">Corporate policyholders can claim ITC on the GST paid for general insurance policies used for business purposes. However, ITC is not available for group life and health insurance plans provided to employees, as per Section 17(5)(b) of the CGST Act, 2017, unless such claims are mandated by law.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This distinction helps manage GST liabilities appropriately for both individual and corporate policyholders, ensuring compliance with tax regulations.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Place-of-Supply-for-GST-on-LIC-Premiums\"><\/span><b>Place of Supply for GST on LIC Premiums<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Determining the place of supply is crucial for the correct levy of GST on LIC premiums. The place of supply is defined based on the following criteria:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Registered Policyholders<\/b><span style=\"font-weight: 400;\">: The place of supply is the location of the insured or policyholder if they are registered.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Unregistered Policyholders<\/b><span style=\"font-weight: 400;\">: For unregistered policyholders, the place of supply is the location of the recipient of services as recorded by the supplier.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Multi-State Registrations<\/b><span style=\"font-weight: 400;\">: If the recipient is registered in multiple states, the place of supply is where the policy is issued by the supplier company.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Group Insurance Policies<\/b><span style=\"font-weight: 400;\">: For group insurance policies with multiple branches, the place of supply is the location of the company\u2019s head office.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>ULIP Funds<\/b><span style=\"font-weight: 400;\">: The place of supply for ULIP funds is the location of the fund management office.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b style=\"font-size: 19px;\">Master\/Group Policies<\/b><span style=\"font-size: 19px;\">: For single premium master\/group policies with beneficiaries across different states, the place of supply is the location of the registered person paying the premium.\u00a0<\/span><\/li>\n<\/ul>\n<h2><span class=\"ez-toc-section\" id=\"SAC-Codes-for-Insurance-Policies\"><\/span><strong>SAC Codes for Insurance Policies<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">In the context of GST, <\/span><b>Services Accounting Codes (SAC)<\/b><span style=\"font-weight: 400;\"> are used to classify various types of services, including insurance. Each insurance policy type falls under a specific SAC code, which determines how GST is applied.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here&#8217;s a list of key SAC codes relevant to insurance services:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><strong>Description<\/strong><\/td>\n<td><strong>SAC Code<\/strong><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Insurance and pension services (excluding reinsurance services)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">99713<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Life insurance services (excluding reinsurance services)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">997132<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Reinsurance services<\/span><\/td>\n<td><span style=\"font-weight: 400;\">99714<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Accidental death insurance services<\/span><\/td>\n<td><span style=\"font-weight: 400;\">997133<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Marine, aviation, and other transport insurance services<\/span><\/td>\n<td><span style=\"font-weight: 400;\">997135<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Motor vehicle insurance services<\/span><\/td>\n<td><span style=\"font-weight: 400;\">997134<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Other non-life insurance services (excluding reinsurance services)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">997139<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Other property insurance services<\/span><\/td>\n<td><span style=\"font-weight: 400;\">997137<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Freight and travel insurance services<\/span><\/td>\n<td><span style=\"font-weight: 400;\">997136<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span class=\"ez-toc-section\" id=\"Key-Advance-Rulings-on-GST-for-LIC-Premiums\"><\/span><strong>Key Advance Rulings on GST for LIC Premiums<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Several advance rulings have provided clarity on the application of GST to LIC premiums and related services. These rulings help determine how GST applies in specific circumstances and provide important legal interpretations.<\/span><\/p>\n<h3><strong>Karnataka AAR Ruling No. KAR ADRG 30\/2020<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">In this ruling, the <\/span><a href=\"https:\/\/gst.kar.nic.in\/Documents\/General\/AAR_Anil_30.pdf\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Karnataka Advance Ruling Authority (AAR)<\/span><\/a><span style=\"font-weight: 400;\"> confirmed that proceeds received at the maturity of a LIC policy are not subject to GST. The rationale is that once the policy matures, no active service is being provided, and therefore the maturity sum does not fall under the scope of GST. As a result, the maturity proceeds should not be included in the aggregate turnover for GST purposes.<\/span><\/p>\n<h3><strong>Telangana AAR Order No. 28\/2022<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">In a case brought by M\/s Hyderabad Metropolitan Water Supply and Sewerage Board, the <\/span><a href=\"https:\/\/www.tgct.gov.in\/tgportal\/GST\/Uploads\/bind_GST_policy_files.aspx?type=Advance%20Ruling\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Telangana AAR<\/span><\/a><span style=\"font-weight: 400;\"> ruled that the GST exemption under Entry No. 3 of Notification No. 12\/2017 &#8211; Central Tax (Rate) does not apply to health insurance premiums paid for employees and pensioners. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The board, a government entity, had argued that its health insurance services should be exempt from GST. However, the AAR ruled that municipal and statutory bodies are liable to pay <a href=\"https:\/\/razorpay.com\/learn\/gst-on-health-insurance\/\">GST on medical insurance<\/a> premiums, highlighting that such services are not considered &#8220;pure services&#8221; under the exemption entry.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">These rulings emphasize the nuanced treatment of GST when it comes to LIC policies, with key distinctions between services provided during the policy&#8217;s term and the proceeds paid upon maturity. They also underscore that government entities are not exempt from GST on insurance premiums.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Frequently-Asked-Questions\"><\/span>Frequently Asked Questions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><strong>Q.1) <\/strong><strong>How much GST is levied on LIC premium?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">From September 2025, no GST is applicable on individual LIC term plans, health plans, endowment plans, pension plans, or ULIPs. All individual life and health insurance products are now fully exempt from GST (0%) under the new GST 2.0 framework<\/span><\/p>\n<h3><strong>Q.2) Is LIC premium with GST under 80C?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Yes, LIC premiums, including those with GST, are eligible for tax deduction under Section 80C of the Income Tax Act. This section allows deductions for premiums paid on life insurance policies up to a maximum limit of \u20b91.5 lakh per annum.<\/span><\/p>\n<h3><strong>Q.3) Is GST payable on LIC commission?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Yes, GST is applicable on LIC commission. Agents or intermediaries earning commissions from LIC policies are subject to an 18% GST on the commission received.<\/span><\/p>\n<h3><strong>Q.4) When is GST charged on LIC premiums?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">GST is charged on LIC premiums at the time of policy issuance or renewal. The GST is added to the premium amount payable, and the rate varies depending on the type of policy.<\/span><\/p>\n<h3><strong>Q.5) Is GST refundable on LIC premiums?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">No, GST on LIC premiums is generally not refundable. It is a consumption tax and is not subject to refund, except in specific cases where an exemption or special provision applies.<\/span><\/p>\n<h3><strong>Q.6) Can I claim input tax credit for GST paid on LIC premiums?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">Individual policyholders cannot claim input tax credit (ITC) on GST paid for LIC premiums as these policies are for personal use. However, corporate policyholders may claim ITC on GST paid for general insurance policies, excluding group life and health plans for employees unless required by law.<\/span><\/p>\n<h3><strong>Q.7) How does GST on LIC premiums affect my overall tax liability?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">GST on LIC premiums adds to the cost of insurance but does not directly affect your income tax liability. However, premiums paid, including GST, qualify for tax deductions under Section 80C of the Income Tax Act, reducing your taxable income.<\/span><\/p>\n<h3><strong>Q.8) Are there any tax benefits associated with GST on LIC premiums?<\/strong><\/h3>\n<p><span style=\"font-weight: 400;\">While GST itself does not offer tax benefits, the premiums paid, including GST, can be deducted under Section 80C of the Income Tax Act. This can lower your overall taxable income and reduce your tax liability.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Understanding GST on Life Insurance Premiums Starting September 2025, GST is no longer applicable on individual LIC life and health insurance policies. The earlier structure -where LIC life insurance premiums attracted 4.5% GST, term and health plans were taxed at 18%, and endowment or annuity plans had 4.5% GST in the first year &#8211; has<\/p>\n","protected":false},"author":151156613,"featured_media":13705,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3913],"tags":[3941],"class_list":{"0":"post-12600","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-gst-rates-goods-and-service-tax-rates-slabs","8":"tag-gst-on-lic-premium"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/12600","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156613"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=12600"}],"version-history":[{"count":15,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/12600\/revisions"}],"predecessor-version":[{"id":18435,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/12600\/revisions\/18435"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/13705"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=12600"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=12600"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=12600"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}