GST 2.0: 0% GST on Term Insurance: What the Latest Reforms Mean for You
GST
Dated:- 6-10-2025
PTI
For years, term insurance premiums were taxed at 18% GST. Due to this, the premiums were costly, and a lot of people in India avoided term insurance plans due to the tax. However, after the GST 2.0 (w.e.f 22 September 2025, there will be 0% GST charged on term insurance. This makes term insurance premiums much more affordable than ever. However, how does this benefit you, and what should you do?
In this post, we'll discuss everything you need to know about this change, why it matters, and how it will affect you.
What is Term Insurance?
Term insurance is one of the most basic forms of life insurance. You pay a fixed premium fo
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as tax.
Under GST 2.0, this 18% GST has been removed by the government. Now, you only have to pay the premium amount mentioned by the insurer. No extra GST. So a plan that previously cost you ?11,800 now costs you only ?10,000.
Why is This Important?
For Indian families, even minor costs can mean a lot. The GST previously had rendered term insurance plans much less attractive than other financial instruments. However, the GST 2.0 has lowered the price of term insurance, and now it is more attractive and cheaper.
Here's why it counts:
• Lower premium cost: With no GST, premiums are cheaper and more affordable.
• Much more accessible for people: More individuals can purchase term insurance as there is less entry cost.
• Promote
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term planning
Now that your policy is less expensive, you can use the amount saved to invest in other objectives such as retirement, education, or medical expenses.
3. More coverage for the same budget
Now you have the option to choose a greater sum assured at the same price. Rather than paying tax, you can invest the money in increasing your cover.
What Should You Do Now?
If you have not purchased a term insurance plan till now, now is the best time to do so. The policies are more affordable, and the sooner you get them, the lower your premium will be.
However, if you already have a term plan, you will automatically get lower premiums when the time comes for your next premium. Individuals can also opt to boost their cover now a
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