LIC Passes On Full GST Exemption Benefit to Policyholder: Net Profit Rises to Rs 10,053 Crore - CAclubindia
The Life Insurance Corporation of India (LIC) has announced that it has fully passed on the benefits of the recent Goods and Services Tax (GST) exemption on life insurance premiums to its customers. This move, the insurer said, will make life insurance more affordable and is expected to boost insurance penetration across the country.
Announcing the company's Q2 FY26 results, LIC's CEO and Managing Director S. Mohan Doraiswamy stated,
"We at LIC have ensured that all intended benefits of GST changes are passed on to customers."
The move follows the GST 2.0 framework, under which the government exempted all individual life and health insurance premiums from GST, effective September 22, 2025. Prior to this change, insurance premiums attracted GST rates of up to 18%.
Affordable Insurance, Aligned with 'Insurance for All by 2047' Vision
LIC said the exemption would enhance affordability for millions of policyholders and help advance India's long-term goal of achieving "Insurance for All by 2047." The insurer expects the policy reform to boost business volumes, strengthen top-line growth, and optimise operational costs.
Doraiswamy said the value of new business (VNB) rose to 17.6% in Q2 FY26, compared to 16.2% in the same quarter last year, signalling improved profitability.
LIC Maintains Strong Market Leadership
LIC continues to maintain its dominant position in India's life insurance market, with a 59.41% market share based on first-year premium income.
While the annual premium equivalent (APE) growth in the first half of FY26 remained muted, Doraiswamy attributed this to the product revamp carried out to align with the regulator's master circular before the September 30, 2025 deadline.
"The performance was impacted by a high base last year, but we are seeing good traction in the second half," Doraiswamy said, expressing optimism about the growth outlook.
He added that the GST exemption is expected to further accelerate business growth in the upcoming quarters.
Focus on Non-Par Segment and Digitalisation
LIC's non-participating (non-par) product segment continued to show progress, contributing 36.31% to overall business. However, Doraiswamy clarified that the insurer is not targeting a specific market share in this category.
"We think with 36.31 per cent, we have reached enough momentum on non-par, and definitely with all the efforts we have taken in the past, we hope for it to stabilise," he said.
On the digital transformation front, LIC confirmed that its new platform version is under internal testing and pilot runs, with a public launch expected soon. The initiative is part of LIC's broader strategy to modernise operations and enhance customer experience.
Strong Q2 Financial Performance
The country's largest life insurer reported a 32% jump in standalone net profit to Rs 10,053.39 crore for the July-September 2025 quarter, compared with Rs 7,620.86 crore in the same period last year.
LIC's net premium income grew 5.5% YoY to Rs 1.26 lakh crore, up from Rs 1.2 lakh crore in the previous year. The insurer also strengthened its solvency ratio to 2.13%, compared with 1.98% a year ago, indicating improved financial stability.
Outlook: GST Relief to Drive Growth in H2 FY26
Analysts expect the GST exemption on life insurance to act as a major growth catalyst for the industry, improving affordability and customer sentiment. With a robust festive season, policy renewals, and tax benefits aligning with GST reforms, LIC is well-positioned to maintain its leadership in the sector.
"The GST 2.0 exemption provides an opportunity to deepen financial inclusion and drive the next phase of growth for the insurance industry," Doraiswamy concluded.