LIC 0% GST Update (Sep 2025): How Much Will You Save?
A massive relief for millions of Indian policyholders! The GST Council has proposed reducing the GST on life insurance premiums to 0%, effective September 2025. Here is exactly what this means for your wallet.
For years, paying life insurance premiums meant paying a substantial amount of tax. Traditional endowment plans like LIC Jeevan Anand and Jeevan Labh carried a 4.5% GST in the first year and 2.25% in subsequent years. Pure term insurance policies had a heavy 18% GST burden.
With the new 0% GST update starting September 2025, policyholders can expect a significant reduction in their out-of-pocket expenses for securing their families' futures.
Savings Calculation: Before and After 0% GST
Let us look at a practical example. Suppose you purchase an LIC Jeevan Anand policy with a base premium of ₹50,000 per year.
| Year | Old GST System | New 0% GST System | Your Savings |
|---|---|---|---|
| First Year | ₹52,250 (4.5% GST) | ₹50,000 | ₹2,250 |
| Subsequent Years | ₹51,125 (2.25% GST) | ₹50,000 | ₹1,125 / year |
Does this apply to existing policies?
Yes! This change is expected to apply to all premium transactions processed after the effective date. Whether you bought your policy in 2010 or are buying it today, the upcoming installments from September 2025 onwards will not include GST.
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