Applicability of GST on deduction for cancellation of Pension policy

Save Share

This query is : Resolved

Yogesh Shah (Querist)
Follow

20 April 2026 I have invested the funds in Tata AIA shubh flexi plan of pension policy during the last month. Now I want to cancel the said policy due to finanical problems. In this conneciton, please let me know whether GST will be charged on deduction while cancellation of this policy. In fact while investing the funds in Pension policy, No GST was applicable.

So kindly clarify for above point of GST.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
Follow

20 April 2026 GST is not normally deducted on the entire refund amount merely because a pension/life policy is cancelled. The key issue is whether the insurer is levying any surrender, discontinuance or other service charge. Under GST insurance FAQs, other charges are taxable at the time of levy/recovery. Therefore, if Tata AIA deducts only a policy charge, GST may apply on that charge component; if there is no such charge and only surrender value is paid, a separate GST deduction on the refund itself should generally not arise. Also please check whether the request is within the IRDAI free-look period, because in that case cancellation is governed by free-look refund rules.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now