LIC AGENT COMMISSIONS

For an LIC agent earning commission above Rs 20 lakh, here is the complete position:

GST IS PAYABLE but by LIC, not by you: Insurance agent services are covered under Reverse Charge Mechanism (RCM) per Notification No. 13/2017-Central Tax (Rate), Entry No. 7. The INSURANCE COMPANY (LIC) is liable to pay GST at 18% on the commission they pay you. You do not collect GST from LIC or pay it yourself.

Registration requirement for the agent: Section 23(1)(b) of the CGST Act exempts persons who exclusively supply services that are taxable under RCM from the registration requirement. So if your ONLY source of GST-taxable income is LIC commission, you are NOT required to take GST registration even if commission exceeds Rs 20 lakh.

Exception: If you also earn other taxable income (rental on commercial property, consulting fees, professional services, etc.) that is not under RCM, and your combined turnover exceeds Rs 20 lakh, then you must register and charge GST on those other supplies. The LIC commission remains under RCM regardless.

September 2025 update for context: Individual life insurance premiums are now GST-EXEMPT (0%) effective September 22, 2025. This changes the premium cost for policyholders. However, this exemption does NOT change the agent commission treatment. Commissions are still under RCM at 18% payable by LIC.

Practical steps:

1. You do NOT need to issue a GST invoice to LIC
2. Maintain proper records of commission income for income tax (declare under PGBP or other applicable head)
3. If LIC deducts TDS under Section 194D on your commission, claim it in ITR
4. If you also do other business, check if combined turnover triggers registration

For the full picture of how GST applies to insurance premiums, agents, and group vs individual policies after the September 2025 rate changes, see: [Tax Garden's GST on Insurance Premiums guide](https://taxgarden.in/blog/gst-on-insurance-premiums-india-health-life-motor-2026)