Private Life insurers reduced committees by 18 percent due to a lack of input tax credit in a new GST regime
As they pass on the goods and service tax (GST) benefits to policyholders, private life insurers seem to have shifted the burden of the GST declaration of their operational costs, at least partly, to insurance distributors.
“The decision was made after thorough discussions among the members of the industry as the lack of input tax credit (ITC) in the new GST regime came into force from September 22, 2025,” said the main distribution officer of a large private life insurance company line On Friday.
The 18 percent GST about individual life and health coverage was removed by the center last month as part of GST nationalization. Because of this, the insurers had lost the benefit of ITC and took a hit during the full advantage of GST reduction to the policyholders.
In this process they could not claim ITC on GST that they pay at costs, including committees, rent and software.
The decision to reduce the committee has been taken in consultation with the insurance regulations and Development Authority of India (IRDAI), is being taught.
Impact
The reduction of the committee, which came into effect from 1 October for all types of distributors, including business authorities and individual agents, is linked to 18 percent, while the adverse impact due to the lack of ITC will be lower than 18 percent.
“Although all life insurers have approved an 18 percent commissioned to keep market dynamics stable for the time being, it will certainly change because insurers may prefer to leave a uniform committee, depending on their individual status in business,” said the head of the Bancounding channel in a bank in the public sector.
Life insurance committees vary on the basis of the policy type and the provider. Broadly speaking, it will be higher for the first -year committee, while lower renewal committees are offered in the following years of policy.
Commission
The committee’s reduction is not initiated by the market leader, the Life Insurance Corporation of India (LIC). “Last year a small adjustment was made by the committee of agents. On the date there is no reduction of the committee for agents,” said an official.
“We are happy that LIC was not taken into a cut, because there are more than 14 Lakh agents who provide social protection in the corner and the corner of the country,” said Lic Agent M Rama Rao.
Published on October 3, 2025
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