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GST on ULIP
GST applies to ULIPs, but most policyholders do not fully understand what gets taxed and what does not. The tax is not charged on your entire premium. It applies only to specific charges within the ULIP structure. Knowing exactly where GST is deducted helps you calculate the actual cost of your policy and avoid surprises when you review your annual statement.
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- GST on ULIP
List of ULIP Funds ~
Fund Name
AUM
NAV
Returns (in %)
3 Year
5 Year
10 Year
Midcap Fund
SBI Life
AUM:67,697 Cr
67,697 Cr
NAV
49.61
-49.61%
Returns
14.08%
Opportunities Fund
HDFC Life
AUM:35,621 Cr
35,621 Cr
NAV
77.17
-77.17%
Returns
10.24%
High Growth Fund
Axis Max Life
AUM:16,228 Cr
16,228 Cr
NAV
121.17
-121.17%
Returns
20.3%
Highest Returns
Opportunities Fund
ICICI Life
AUM:3,711 Cr
3,711 Cr
NAV
58.72
-58.72%
Returns
12.09%
Highest Returns
Multi Cap Fund
Tata AIA Life
AUM:12,199 Cr
12,199 Cr
NAV
66.32
-66.32%
Returns
11.88%
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Disclaimer :
˜The insurers/plans mentioned are arranged in order of highest to lowest first year premium (sum of individual single premium and individual non-single premium) offered by Policybazaar’s insurer partners offering life insurance investment plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in
How ULIP Premiums Are Structured
A ULIP premium is not one flat payment. It gets split into multiple components before any money goes into your chosen fund.
The main charges include:
- Premium allocation charge - deducted upfront before investment
- Mortality charge - covers the cost of life insurance
- Fund management charge - deducted for managing your investment funds
- Policy administration charge - covers ongoing servicing costs
- Surrender charge - applicable if you exit before the lock-in ends
GST does not apply uniformly across all of these. The rate and applicability depend on the nature of each charge.
GST Rates on ULIP in 2026
- GST on ULIPs is charged at 18%. This replaced the earlier service tax structure when GST was introduced in July 2017.
- However, 18% does not apply to the full premium amount. It applies to the charges component only, not the portion that goes towards your fund investment.
- The rate has remained the same for the past few years and applies uniformly across different insurers and plans.
GST on Different ULIP Charges
ULIPs include different types of charges, and GST is applied to each of them.
| ULIP Charge | GST Applicability (Key Point) |
| Premium Allocation Charge | GST at 18% is levied on the allocation charge deducted from the premium. |
| Policy Administration Charge | GST at 18% applies to the monthly/annual admin charges deducted by the insurer. |
| Mortality Charge | GST at 18% is applicable on the risk (mortality) charge component. |
| Fund Management Charge | GST at 18% is charged on fund management fees deducted from NAV. |
GST on Single Premium ULIP Plans
For single premium ULIPs, the GST treatment is slightly different. A single premium policy is one where you pay the entire amount upfront rather than annually.
On single premium ULIPs, GST at 18% applies only to the risk or insurance component of the premium. The investment portion remains outside the GST net. Insurers calculate what percentage of the single premium covers mortality risk, and GST is applied to that portion alone.
How is GST on ULIP calculated?
The calculation of GST on ULIP is simple. It is calculated as 18% of the specific charge.
For Example,
| Description | Amount (₹) | GST @ 18% (₹) | Total (₹) |
| Premium Paid by Policyholder | (+) 10,000 | - | (+) 10,000 |
| Premium Allocation Charge | (-) 500 | 90 | (-) 590 |
| Mortality Charge | (-) 200 | 36 | (-) 236 |
| Policy Administration Charge | (-) 100 | 18 | (-) 118 |
| Fund Management Charge | (-) 50 | 9 | (-) 59 |
| Total charges impact | 850 | 153 | 1,003 |
Impact of GST on ULIP Returns
GST might appear small percentage but still influences your investment in a big way.
- This is because GST is applied on the charges, reducing the premium used for investment. Over the long term, a reduction in premium for investment results in the reduction of return on the investment.
Latest ULIP NAVs
| Fund Name | NAV  |
AUM |
5 Yr Returns |
10 Yr Returns |
|---|---|---|---|---|
| SBI Life Balanced Fund | ₹70.98 | ₹19726 Cr | 5.06% | 8.29% |
| SBI Life Bond Fund | ₹51.41 | ₹15328 Cr | 5.12% | 5.93% |
| SBI Life Equity Fund | ₹187.42 | ₹81746 Cr | 7.6% | 10.53% |
| SBI Life Equity Optimiser Fund | ₹52.93 | ₹2606 Cr | 6.31% | 9.92% |
| SBI Life Growth Fund | ₹91.04 | ₹2837 Cr | 5.51% | 9.53% |
| SBI Life Money Market Fund | ₹37.84 | ₹482 Cr | 6.07% | 5.87% |
| SBI Life Top 300 Fund | ₹53.8 | ₹1972 Cr | 5.31% | 10.37% |
| SBI Life Pure Fund | ₹27.37 | ₹1251 Cr | 5.06% | 9.11% |
| SBI Life Bond Optimiser Fund | ₹22.5 | ₹3214 Cr | 5.96% | - |
| SBI Life Midcap Fund | ₹49.61 | ₹67697 Cr | 12.37% | 15.28% |
| SBI Life Corporate Bond Fund | ₹16.73 | ₹1009 Cr | 5.08% | - |
| SBI Life Balanced Pension | ₹71.19 | ₹867 Cr | 5.53% | 9.34% |
| SBI Life Equity Optimiser Pension | ₹56.86 | ₹1105 Cr | 6.62% | 11% |
| SBI Life Equity Elite II | ₹49.53 | ₹11844 Cr | 5.64% | 9.79% |
| SBI Life Index | ₹43.74 | ₹87 Cr | 4.89% | 10.11% |
| SBI Life Index Pension | ₹45.7 | ₹24 Cr | 4.95% | 10.16% |
| SBI Life Top 300 Pension | ₹53.12 | ₹772 Cr | 5.63% | 10.93% |
| SBI Life Discontinued Policy Fund | ₹26 | ₹10931 Cr | 5.61% | 5.77% |
| SBI Life Bond Pension | ₹45.63 | ₹552 Cr | 5.16% | 6.24% |
| SBI Life Equity Elite | ₹83.07 | ₹12 Cr | 7.36% | 12.51% |
| SBI Life Equity Pension | ₹71.85 | ₹13758 Cr | 6.28% | 11.05% |
| SBI Life Growth Pension | ₹71.93 | ₹692 Cr | 6.26% | 10.38% |
| SBI Life Money Market Pension | ₹35 | ₹160 Cr | 6.02% | 5.85% |
| SBI Life P-E Managed | ₹37.52 | ₹195 Cr | 6.31% | 8.76% |
| SBI Life Guaranteed Pension GPF070211 | ₹26.93 | ₹1 Cr | 4.95% | 5.68% |
| SBI Life Bond Pension II | ₹23.67 | ₹28119 Cr | 4.87% | 5.55% |
| SBI Life Equity Pension II | ₹39.18 | ₹11378 Cr | 4.94% | 10.32% |
| SBI Life Money Market Pension II | ₹21.35 | ₹1488 Cr | 5.78% | 5.6% |
| SBI Life Discontinue Pension Fund | ₹21.97 | ₹6203 Cr | 5.65% | - |
| SBI Life Group Growth Plus Fund | ₹56.15 | ₹3 Cr | 5.79% | - |
| SBI Life Group Debt Plus Fund | ₹40.67 | ₹115 Cr | 5.56% | - |
| SBI Life Group Balance Plus Fund | ₹47.73 | ₹11 Cr | 5.56% | - |
| SBI Life Group Balance Plus Fund II | ₹27.27 | ₹1273 Cr | 6.4% | - |
| SBI Life Group Debt Plus Fund II | ₹26.43 | ₹363 Cr | 5.62% | - |
| SBI Life Group Growth Plus Fund II | ₹26.45 | ₹291 Cr | 6.14% | - |
| SBI Life Group Short Term Plus Fund II | ₹21.82 | ₹24 Cr | 5.77% | - |
| SBI Life Group Money Market Plus Fund | ₹14.21 | ₹2 Cr | 3.35% | - |
| SBI Life Group Balanced Pension Fund | ₹10.11 | ₹194 Cr | - | - |
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- A small difference might accumulate significantly due to compounding over 10 to 15 years. Therefore, it is necessary to consider the impact of GST in the total return of your investment.
- A way to look at the matter would be that GST impacts your charges, increasing their impact.
Is GST on ULIP Eligible for Tax Deduction?
The premium you pay for a ULIP, including the GST component on charges, is eligible for deduction under Section 80C up to Rs 1.5 lakh per year. There is no separate treatment for the GST portion. The entire amount paid, charges and all, counts towards the 80C limit.
ULIP Tax Benefits
Even though GST applies to ULIPs, they still offer good tax benefits under income tax laws.
There will be a deduction of premium of up to 1.5 lakhs under Section 80C of the Income Tax Law. Besides this, the maturity amount is exempted from tax under Section 10(10D). But as per recent changes, if the annual premium of ULIPs exceeds 2.5 lakh, then the maturity amount will be taxed as capital gain.
ULIP Banner 2GST vs Earlier Service Tax on ULIPs
Before July 2017, service tax applied to ULIP charges at 15% (including Swachh Bharat Cess and Krishi Kalyan Cess). GST replaced that at 18%, which means the tax cost on ULIP charges went up by 3 percentage points after the GST rollout. For long-term policyholders, this added a marginal but real cost to holding ULIPs.
Conclusion
GST at 18% applies to ULIP charges, not your entire premium. Mortality charge, allocation charge, administration charge, and FMC all attract GST. The money going into your fund does not. The real impact is not visible as a single deduction. FMC-linked GST chips away at your NAV every day. Over 15 years, that adds up. Before signing any ULIP, ask for the complete charge sheet. Lower charges mean less GST and better returns. That one step saves you from paying more than you need to.
FAQs
-
Is GST charged on the full ULIP premium?
No. Take a Rs 1 lakh annual premium as an example. Out of this, Rs 8,000 might go towards mortality and administration charges. GST at 18% hits that Rs 8,000 only. The remaining Rs 92,000 moving into your fund has no GST on it. -
What is the GST rate on ULIP in 2026?
18%. It has sat at this rate since July 2017. Before that, service tax at 15% applied. The switch to GST added 3 percentage points to the charge cost for ULIP holders. -
Does GST reduce my ULIP returns?
It does not show up as a direct cut to your returns. But fund management charge is deducted from NAV every single day. GST on that FMC gets baked into the same calculation. Stay invested for 12 to 15 years and that silent daily drag adds up to a meaningful number. -
Is GST applicable to the ULIP maturity amount?
No, the maturity payout has nothing to do with GST. By the time you receive the corpus, all applicable charges have already been deducted during the policy term. What lands in your account at maturity is clean of any GST.
Insurers Offering ULIPs
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or
insurance product offered by an insurer.
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˜The insurers/plans mentioned are arranged in order of highest to lowest first year premium (sum of individual single premium and individual non-single premium) offered by Policybazaar’s insurer partners offering life insurance investment plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance
plan.
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
+Returns Since Inception of LIC Growth Fund
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
++Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
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