OneInsure Blog
Post By Mariya Panwala
GST Impact on Endowment Plans
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GST, Endowment Plans, Life Insurance
Endowment plans offer both risk and maturity benefits. In endowment plans, the rate of tax is different in the first year and it changes from the second year onwards. Before the implementation of the Goods and Services Tax (GST), while buying an insurance plan, the policyholder paid a service tax of 3.75% on the first year premium amount. From the second year onwards, the policyholder paid a service tax of 1.88% on renewal premium amount. However, post-GST, the policyholder will pay a service tax of 4.5% on the first year premium amount while buying a new policy, and 2.25% on renewal premium amount from the second year onwards.
| Type of Policy | Current Rate | After GST Implementation |
| Endowment Policies (1st year) | 3.75% | 4.5% |
| Endowment Policies (2nd year onwards) | 1.88% | 2.25% |
These new tax rates will apply to all those who purchase endowment plans in the GST regime, which started on July 1, 2017.
Here are the advantages of endowment plans in brief:
- The safest way to grow wealth
- Steady savings that remove all risks and guarantee returns
- Additional death cover
Read Also: Finding the Best Endowment Policy
