Govt May Cut GST on LIC Premiums – Here’s What the Finance Ministry Says

GST on LIC Premiums: What’s the Current Status?

The central government has said that any change in GST (Goods and Services Tax) on LIC or other insurance premiums will depend on recommendations from the GST Council.

Parliament Query on LIC Premium GST

Recently in the Lok Sabha, the government was asked if it plans to reduce GST on LIC premiums. Minister of State for Finance, Pankaj Choudhary, responded that the GST Council is still discussing the matter. A Group of Ministers (GoM) was formed in 2024 to review GST on both health and life insurance.

What Has the GST Council Done So Far?

• The matter was initially brought up during the 54th GST Council meeting held in September 2024.
• A GoM led by Bihar’s Deputy CM Samrat Choudhary was set up to look into the matter.
• At the 55th meeting in December 2024, the GoM asked for more time to finalise its suggestions.
• The GST Council accepted the request and is likely to take up the issue in its scheduled meeting this month (August 2025). 

What Changes Are Being Considered?

• Reports say the GoM has suggested scrapping GST on term life insurance and health policies for senior citizens.
• They may also exempt GST on health insurance plans with coverage up to ₹5 lakh.
• The IRDAI (Insurance Regulatory and Development Authority of India) has already given its opinion, which was shared with the council in December 2024.

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Conclusion

A reduction or complete removal of GST on LIC and health insurance premiums is being seriously considered. The final call rests with the GST Council, which is likely to take up the matter in its upcoming meeting this month. If approved, policyholders, especially senior citizens, could see major relief in premium costs.

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