There is no single best LIC policy. Here are the currently sold LIC plans that fit each goal, from term cover to pension, with real premium examples.
Quick answer
There is no GST on LIC premium for individual policies paid on or after 22 September 2025. The GST Council exempted all individual life insurance, including term, endowment, money back, ULIP and annuity plans, at its 3 September 2025 meeting. Before that, traditional plans carried 4.5% GST in the first year and 2.25% later, and term plans 18%. Group policies still attract 18% GST.
There is no GST on LIC premium for individual policies any more. From 22 September 2025, premiums on all individual life insurance policies, including LIC’s endowment, money back, term, ULIP and annuity plans, are exempt from GST, so you pay only the base premium. This guide explains the decision, the old rates, how much you save and what it means if you already hold an LIC policy.
What changed on 22 September 2025
The GST Council, at its 56th meeting on 3 September 2025, decided to exempt individual life and health insurance from GST. The change was notified by the government on 17 September 2025 (Notification No. 16/2025-Central Tax (Rate)) and took effect on 22 September 2025, the same day as the wider GST rate changes.
Before this, life insurance premiums had carried GST since GST began on 1 July 2017. The stated aim of the exemption is to make insurance cheaper and to bring more people under cover. The Department of Financial Services has said that insurers, at a meeting with IRDAI on 17 September 2025, agreed to pass the benefit on in full to policyholders.
Tip: check the premium receipt for your first renewal after 22 September 2025. The GST line should read zero. If it does not, raise it with your LIC branch or through LIC’s grievance channel.
Which policies are covered
The exemption covers life insurance provided by an insurer to an individual policyholder. Group cover is excluded.
| Policy type | GST from 22 Sep 2025 |
|---|---|
| Individual term plans | Exempt |
| Endowment, money back and whole life plans | Exempt |
| ULIPs (unit-linked plans) | Exempt |
| Individual annuity and pension plans | Exempt |
| Reinsurance of the above | Exempt |
| Individual health and family floater policies | Exempt |
| Group term, group credit life and employer group policies | 18% continues |
In short, if the policy is in your name and you pay the premium, it is covered. If your employer, a bank or an association holds a master policy for a group, GST still applies. See our group term plan calculator for how group cover is priced.
The old GST rates on LIC premium
For reference, and for anyone comparing old receipts, these are the rates that applied from July 2017 until 21 September 2025. The headline GST rate was 18%, but for savings plans it was charged on only part of the premium.
| Type of policy | How GST was charged | Effective rate |
|---|---|---|
| Traditional plans (endowment, money back, whole life): first year | 18% on 25% of premium | 4.5% |
| Traditional plans: renewal years | 18% on 12.5% of premium | 2.25% |
| Pure term (protection) plans | 18% on the full premium | 18% |
| ULIPs | 18% on charges only (mortality, admin, fund management) | Varies |
| Single-premium annuity plans | 18% on 10% of purchase price | 1.8% |
Before and after: ₹50,000 premium
Here is what a ₹50,000 premium cost before and after the exemption:
| Policy type | GST before 22 Sep 2025 | Total paid before | Total paid now | Saving |
|---|---|---|---|---|
| Endowment, first year | ₹2,250 | ₹52,250 | ₹50,000 | ₹2,250 |
| Endowment, renewal year | ₹1,125 | ₹51,125 | ₹50,000 | ₹1,125 |
| Term plan | ₹9,000 | ₹59,000 | ₹50,000 | ₹9,000 |
| Single-premium annuity | ₹900 | ₹50,900 | ₹50,000 | ₹900 |
| ULIP | 18% of that year’s charges (e.g. ₹540 if charges were ₹3,000) | ₹50,540 in that example | ₹50,000 | ₹540 in that example |
The ULIP row is only an illustration, because charges differ by plan, age and fund value. Use the ULIP calculator to see how charges work.
Worked example with real LIC plans
Numbers from our own calculators make the saving concrete:
- Jeevan Labh 736 (age 30, 21-year term, ₹10 lakh sum assured): the yearly premium is ₹55,505. Under the old rules it would have cost ₹58,003 in the first year (₹2,498 GST) and ₹56,754 in each later year (₹1,249 GST). Over the 15-year premium term, the GST alone would have come to about ₹19,984. Check it in the Jeevan Labh 736 calculator.
- New Tech Term 954 (male non-smoker, age 30, ₹1 crore cover for 30 years): the yearly premium is about ₹11,837. At 18% GST it would have been about ₹13,968, a difference of ₹2,131 a year, or about ₹63,920 over 30 years. See the New Tech Term 954 calculator.
- New Jeevan Shanti 758 (annuity): on a ₹10 lakh purchase price, the old 1.8% GST meant an extra ₹18,000. Now the whole ₹10 lakh goes towards the annuity. Try the New Jeevan Shanti 758 calculator.
For how the base premium itself is worked out, read how LIC premium is calculated.
What it means for existing policyholders
The exemption follows the date of payment, not the date you bought the policy. That leads to a few practical points:
- Renewals are GST-free. Every renewal premium on an existing individual policy paid on or after 22 September 2025 carries no GST, whether the policy started in 2005 or 2025.
- Late payments. The Department of Financial Services FAQs say the rate on the date of payment applies. A premium due on or before 21 September 2025 but paid on or after 22 September 2025 should not attract GST.
- Instalments are treated separately. If you pay monthly or quarterly, instalments paid before 22 September 2025 keep their GST, and those paid later have none.
- Advance premiums. For premiums paid in advance around the changeover, the normal GST time-of-supply rule applies. If you paid ahead and were charged GST, ask your branch how it was treated.
- No refunds of old GST. Tax correctly charged on premiums paid before the change is not refunded.
- Benefits do not change. Sum assured, bonuses, maturity value and death benefit stay as in the policy. Only the tax on top has gone.
- NACH and salary deductions. Your auto-debit should now be for the base premium. If an old GST-inclusive amount is still being debited, contact LIC.
What the exemption does not change
- Group policies, including group credit life cover sold with loans, still carry 18% GST.
- Income tax rules are unchanged: Section 123 of the Income-tax Act, 2025 (earlier Section 80C) deduction (old regime), Section 11 read with Schedule II of the Income-tax Act, 2025 (earlier Section 10(10D)) exemption on maturity subject to its conditions, and TDS under Section 393 of the Income-tax Act, 2025 (earlier Section 194DA) on taxable payouts all work as before.
- Base premium rates are set by each plan’s premium table. The exemption removes the tax on top of the premium; it does not by itself change the rate per ₹1,000.
One thing to watch: because insurers can no longer claim input tax credit on their own costs when their output is exempt, some analysts expected pressure on future pricing. Insurers told IRDAI they would hold existing rates, but new products may be priced differently. Always compare the actual premium on the benefit illustration.
Key takeaways
- GST on LIC premium is nil for individual policies from 22 September 2025.
- The exemption covers term, endowment, money back, whole life, ULIP and annuity plans, new and existing.
- Old rates were 4.5% (first year) and 2.25% (renewal) on traditional plans, 18% on term, 18% on ULIP charges and 1.8% on single-premium annuities.
- A ₹50,000 term premium used to cost ₹59,000; now it costs ₹50,000.
- Group policies still carry 18% GST, and GST paid before the change is not refunded.
- Use the all-in-one premium calculator to see the GST-free premium for any LIC plan.
Try these calculators
Frequently asked questions
Is GST charged on LIC premium now?
No. From 22 September 2025, premiums on individual life insurance policies are exempt from GST. This covers LIC's individual endowment, money back, whole life, term, ULIP and annuity plans, whether new or existing. You pay only the base premium.
What was the GST rate on LIC premium before 22 September 2025?
Traditional plans such as endowment and money back carried 4.5% GST on the first-year premium and 2.25% on renewal premiums. Pure term plans carried 18% on the full premium, ULIPs 18% on charges only, and single-premium annuity plans 1.8% of the purchase price.
Is GST removed on existing LIC policies too?
Yes. The exemption applies to the premium payment, not the policy start date. Any renewal premium on an existing individual policy paid on or after 22 September 2025 is GST-free, even if the policy was bought years ago.
My premium was due before 22 September 2025 but I paid it later. Will GST apply?
According to the Department of Financial Services FAQs, the rate that applies is the one on the date of payment. A premium due on 21 September 2025 but paid on or after 22 September 2025 should carry no GST.
Will I get a refund of GST paid on earlier premiums?
No. GST correctly charged on premiums paid before 22 September 2025 stays paid. The exemption only applies to payments from that date onward, so old receipts will still show GST.
Is GST still charged on group insurance?
Yes. The exemption is only for individual policies. Group term, employer-sponsored group life and group credit life policies continue to attract 18% GST.
Does the GST exemption change my sum assured or bonus?
No. Your sum assured, bonuses, maturity benefit and death benefit stay exactly as in the policy. Only the tax added on top of the premium has gone.
Disclaimer: LIC Premium Calculators is an independent website. We are not affiliated with, endorsed by or connected to Life Insurance Corporation of India. All figures are estimates for illustration; confirm exact premiums and benefits with LIC or a licensed agent before buying.