Should You Delay Your Insurance Purchase from Sept 22 After GST Kicks In
However, if you have already bought a multi-year policy, the GST already paid is not refundable. On policies already bought by you, the GST exemption will apply from your next renewal after September 22, 2025.
Mumbai: With the Goods and Services Tax (GST) rates reduced from 18 per cent to nil on all individual life and health insurance premiums effective September 22, buyers wanting to buy a fresh insurance policy can consider delaying purchase till the due date to reap the benefits of the GST cuts.
However, if you have already bought a multi-year policy, the GST already paid is not refundable. On policies already bought by you, the GST exemption will apply from your next renewal after September 22, 2025.
If your policy is due before September 22, the 18 per cent GST will still apply even if you pay during the grace period (after the new GST rule kicks in) but you may not be covered during the grace period and any claim that may arise during the grace period may not be honoured by your insurer.
Says Dhirendra Mahayanashi, Co-Founder and CEO at Turtlemint, “It is important to note for existing policyholders not to delay renewals in anticipation of GST benefits, as this could lead to breaks in continuity and loss of coverage.”
Also remember that late payments can impact your No-Claim Bonus (NCB) on health insurance or impact your discounts.
Effective September 22, the GST Council has exempted term life, unit-linked insurance plans (ULIPs), endowment policies, family floater health covers, and senior citizen plans from GST. Reinsurance linked to these policies has also been exempted. Until now, premiums have attracted varying GST rates. Health insurance, ULIPs, and term life were taxed at 18 per cent, while endowment policies carried 4.5 per cent GST on the first premium and 2.25 per cent on renewal premiums. Single premium annuity policies were taxed at 1.8 per cent.