The Life Insurance Corporation of India usually Called as LIC has plainly specified that the crash of GST on LIC items is that it has supplanted Service Tax and the charge will be barely high when contrasted with the past Service Taxes.
A protection strategy is made of two sections – venture and hazard assurance, Goods benefit assess is exacted just on the hazard factor part and not the speculation part and subsequently, term designs will be influenced the most under Goods benefit impose. LIC Insurance Policy, as well as protection premiums of a wide range of wellbeing designs, vehicle protection approaches, enrichment designs, and so forth, have expanded under Goods benefit assess.
The Term LIC Insurance Policy Plans, Health Insurance Plans, and ULIP charges are increased from 15% Service Tax to 18% Goods service tax. NB premium (including Single Premium) of Life Insurance and Pension plans and the First year premium of Annuity plans used to attract 3.75% service tax, which is changed to 4.5% GST now.
The Renewal premiums earlier carried 1.875% Service Tax, now they will attach 2.25% GST. Lastly, for Single Premium of Annuity Plans earlier the Service Tax was 1.5% which is now replaced by 1.8% GST.
Now all these changes will have a moderate impact on everyone however it is the middle class that will be most impacted by it as most of their investments are term plans of LIC Insurance Policy than any other mode of investment.
To the relief of customers, there are a few LIC Insurance Policy plans that continue to be exempted under GST as they were exempted from Service Tax before July 1st, 2017:
(1) Janashree Bima Yojana (JBY); or
(2) Aam Aadmi Bima Yojana (AABY);
(3) Life micro-insurance product as approved by IRDA having a maximum amount of cover of ₹50,000
(4) Varishtha Pension Bima Yojana;
(5) Pradhan Mantri Jeevan Jyoti Bima Yojana;
(6) Pradhan Mantri Jan Dhan Yojana;
(7) Pradhan Mantri Vaya Vanden Yojana;
(8) Any other insurance scheme of the State Governments as recommended by the GST Council
You may refer to the official statement by LIC India on Impact of GST on various LIC policies: