The government’s move to exempt life insurance from the 18% Goods and Services Tax (GST) rate has been a positive step toward enhancing new policy sales.
For October 2025, life insurance companies collected a first-year premium of Rs 34007 crore, which is 12% higher compared to a premium of Rs 30348 crore in October 2024, a rate at which insurers have been growing for several months. In September 2025 life insurance industry had grown the first-year premium by 15% to Rs 40207 crore.
The Life Insurance Corporation of India (LIC), a public sector company, grew by 13% in October with a first-year premium of Rs 19274 crore. The Life insurance industry for April-October has surged by 8% to Rs 2.37 lakh crore in first-year premium, and LIC surges by 6% to Rs 140282 crore.
A drop in new premiums for October has been seen by a few insurers, namely IndiaFirst Life Insurance (-22 per cent to Rs 198 crore), Kotak Mahindra Life Insurance (-11 per cent to Rs 647 crore), and PNB Metlife Insurance (-4 per cent to Rs 513 crore).
A senior life insurance official stated, “I think one month is too early to arrive at any definitive conclusion on GST rate cut impact on life insurance.”
All individual life and health insurance policies w.e.f. September 22, 2025, has been fully exempted from GST, providing cost relief to policyholders facing rising premiums. There were distinct GST rates applicable to premiums before September 22.
Health insurance, ULIPs, and term life were charged to tax at 18%, and endowment policies carried 4.5 per cent GST on the first premium and 2.25 per cent on renewal premiums. There was a 1.8% tax on the Single premium annuity policies.
