GST On Insurance Premium
Goods and Services Tax or GST is applicable to the supply of various goods and services. In case of insurance, it is considered as a type of financial service. So GST on insurance is applicable on the supply of the service of insurance to any policyholder. GST is applicable to insurance premiums at the applicable rate depending on the type of insurance plan that has been chosen.
GST Rates on Insurance Policies
| Types of insurance | GST Rate | Applicability |
| Term Insurance | 18% | On entire premium |
| ULIPs | 18% | On premium except for investment amount |
| Single-Premium Annuity Policies | 1.80% | On 10% of premium |
| Endowment Plans (First Year) | 4.50% | On 25% of premium |
| Endowment Plans (Renewal) | 2.25% | On 12.5% of premium |
| Health Insurance | 18% | On entire premium |
| Car Insurance | 18% | On entire premium |
Tax Savings on GST Paid for Insurance
Policyholders may be able to claim tax benefits under Section 80D of the Income Tax Act for premiums paid towards certain insurance policies. This section allows for deductions from taxable income for premium payments up to specified limits.
This tax deduction helps to offset the impact of GST on insurance premiums, making insurance more affordable for policyholders.
Input tax credit (ITC) for GST paid on insurance premiums
If you are the end-user of the policy, you do not have the option of claiming the GST input tax credit on life insurance separately. However, if you are an employer providing life insurance as an employee benefits scheme, such as gratuity, leave encashment etc. you can claim the GST paid on these plans for ITC.
Policies Exempt from GST on Insurance
Some insurance policies in India are exempt from GST. Here’s a list of popular government insurance schemes that are exempt from GST on insurance:
- Aam Aadmi Bima Yojna
- Pradhan Mantri Jan Dhan Yojna
- Insurance is provided to the Navy, Army and Air force by the state and central government
- Varishtha Pension Bima Yojna
- Pradhan Mantri Vaya Vandana Yojna
GST invoice for premium payments
Insurance companies are required to provide a GST invoice for premium payments. The GST invoice should include the following details:
- Name and address of the insurance company
- GSTIN of the insurance company
- Name and address of the policyholder
- Policy number
- Premium amount
- GST rate
- GST amount
- Total amount
From,
Krishnakant Jakhotia
Mobile No :- 9422507911
Email Id :- taxtalknew@gmail.com
