No GST on Insurance Premiums: A Win for Buyers, a Blow to Agents

Starting October 1, 2025, the government has removed the 18% GST on life and health insurance premiums. Great news for customers, right? But there's a catch – insurance agents are facing major income cuts.

What Changed?

For Customers:

• No more 18% GST on your insurance premiums   you save money!

For Agents & Insurers:

• They're now stuck paying GST without getting refunds

Why Are Agents Losing Money?

Here's the simple breakdown:

Before October 1:

• Insurance companies paid 18% GST on agent commissions
• But they could claim it back as a refund (Input Tax Credit)
• So, no actual loss

After October 1:

• Premiums are GST-free now
• Companies can't claim refunds anymore
• The 18% GST they pay on commissions is now a real cost

The Result?

To save money, most insurance companies are cutting agent commissions by 15–18%.

Real Example

Before: Agent gets ₹100 commission
Now: Agent gets ₹84.74 (₹100 minus 18% GST adjustment)
That's a direct pay cut!

Who's Cutting Commissions?

Private Insurers (making commissions GST-inclusive):

• Tata AIG
• ICICI Lombard
• Aditya Birla Health Insurance
• Care Health Insurance

Public Insurers (protecting agents):

• LIC
• New India Assurance
• Oriental Insurance

These companies are absorbing the GST cost themselves and keeping agent payments unchanged.

The Bottom Line

• Winners: Insurance buyers – you're paying less
• Losers: Insurance agents – earning 15–18% less (at private companies)
• Mixed Bag: Insurance companies – lower premium prices may boost sales, but margins are squeezed

If you're an insurance agent, this is a tough time, especially if you work with private insurers. Consider diversifying your portfolio or partnering with public sector companies that are maintaining commission levels.

If you're buying insurance, now's a great time to get coverage without the extra GST burden!

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