Quick Summary
The recent decision by the GST Council to exempt individual health and life insurance policies from GST after September 22, 2025 has triggered a significant shift in the insurance industry. While the move benefits policyholders by reducing their premium burden, insurers are scrambling to adjust thei
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FAQ :
Insurers are reducing commissions because the GST exemption on individual health and life insurance policies means they can no longer claim input tax credit (ITC) on their expenses, leading to increased costs.
The revised commission payouts will be effective from October 1, 2025.
Insurance distributors and agents will now have to bear the GST burden directly, as the GST amount will be deducted from their payouts.
Distributors' earnings will be reduced. For example, a commission of Rs 100 will now be approximately Rs 84.74 after an 18% GST deduction, as commissions will be treated as GST-inclusive.
It is expected that other health and life insurers will follow suit and revise their commission structures in the coming weeks, following the lead of Tata AIG and Aditya Birla Health Insurance.
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