Understanding Insurance Premium GST in India
Insurance helps you manage risk — but did you know your insurance premium attracts GST too? Whether it’s life, health, motor, or travel insurance, the GST rate is generally 18% as per the CGST Act, 2017.
Insurance Premium GST: What’s Covered
Under GST law:
Life Insurance:
- Premium attracts 18% GST (except pure risk covers like term insurance, where the whole premium is taxable).
- For savings-cum-insurance (like endowment plans), GST applies on a portion of premium — as per Rule 32(4) of CGST Rules.
Health Insurance:
- 18% GST is levied on premiums paid to insurers.
Motor Insurance:
- All motor vehicle insurance premiums attract 18% GST.
Travel Insurance:
- GST at 18% applies.
Exceptions:
- Government Subsidised Crop Insurance Schemes under schemes notified by the Government (e.g., PMFBY) — fully exempt [Ref: Notification No. 12/2017-Central Tax (Rate)].
- Certain life insurance schemes approved by Government are partly exempt — check specific policy terms.
Table: Quick Glance at Insurance Premium GST
| Type of Insurance | GST Rate | Any Exemption? |
|---|---|---|
| Life Insurance (Term) | 18% | No |
| Life Insurance (Endowment/Savings) | 18% on portion | Partial, as per policy |
| Health Insurance | 18% | No |
| Motor Insurance | 18% | No |
| Travel Insurance | 18% | No |
| Subsidised Crop Insurance | 0% | Fully exempt (Govt. notified schemes) |
How to Claim Input Tax Credit (ITC)
For businesses:
- Always maintain proper invoices.
Expert Tip on Insurance Premium GST
Always read the fine print! For savings-linked life policies, insurers deduct GST only on the risk portion. This makes policies slightly more tax-efficient than they appear.
Legal References
- Section 17(5), CGST Act, 2017
- Notification No. 12/2017-Central Tax (Rate) for exemptions
- Rule 32(4) of CGST Rules for valuation of life insurance premium
Refer official GST Council website: www.gst.gov.in
FAQs on Insurance Premium GST
Q1: Is GST charged on term insurance?
Yes, 18% GST is levied on the full premium of term insurance.
Q2: Can I claim GST paid on my personal health insurance?
No, ITC is not allowed for personal expenses.
Q3: Which insurance premium is exempt under GST?
Only subsidised crop insurance and certain Government-approved schemes are exempt.
Summary
Insurance Premium GST is generally 18% for life, health, motor, and travel insurance in India. Only subsidised crop insurance and select Government schemes are exempt. Know rates, exemptions and ITC rules in this guide.
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