GST Withdrawal from Insurance Premiums in India: What It Means for You

The Indian government recently announced the withdrawal of the Goods and Services Tax (GST) on individual life and health insurance premiums, effective September 22, 2025. This move is aimed at making insurance more affordable and accessible to the general public. But what does this mean for policyholders and insurers? Let’s break it down.

How Policyholders Benefit

1. Lower Premiums

Earlier, policyholders had to pay an 18% GST on top of their insurance premiums. With GST removed, the cost of insurance policies drops significantly. For example, a ₹10,000 premium will now cost exactly ₹10,000 instead of ₹11,800, giving an immediate saving of ₹1,800 per year.

2. Refunds on Multi-Year Policies

If you’ve paid premiums in advance for multiple years, you may be eligible for a GST refund for the period after September 22, 2025. While the exact refund process is still being clarified by insurers, this could translate into substantial savings for long-term policyholders.

3. Immediate Savings on New Policies

Any new policies purchased on or after September 22, 2025, will be GST-free. This gives policyholders instant financial relief and makes health and life insurance more accessible.

Challenges for Insurers

1. Loss of Input Tax Credit (ITC)

Insurers previously claimed ITC on GST paid for operational expenses. With GST removed, this credit is no longer available, potentially increasing insurers’ operational costs.

2. Possible Premium Adjustments

To compensate for lost ITC, some insurers may adjust premium rates or modify policy structures. While GST is gone, the base premium may still be revised, which could affect affordability for some policyholders.

3. Commission-Related Issues

Insurance agents’ commissions are still a point of concern. The Life Insurance Council has urged the government to remove GST on agents’ commissions. Without this, insurers face loss of ITC, which may indirectly affect profitability and policy offerings.

What Policyholders Should Do

1. Review Policy Documents – Understand how the GST exemption impacts your premium and coverage.

2. Consult Your Insurer – For multi-year policies, check if you are eligible for a refund.

3. Stay Updated – Watch for changes in premium structures as insurers adjust to this new tax regime.

Final Thoughts

The GST exemption on insurance premiums is a welcome step toward making insurance more affordable in India. While policyholders benefit immediately, insurers may face challenges that could affect policy pricing and offerings in the future. Staying informed and proactive will help you maximize the benefits of this new policy.

Learning the Art of Disciplined Savings

Money comes in and goes out, but disciplined saving ensures it always works for you. Here’s a practical roadmap to build strong savings habits—backed by numbers.

1. Change Your Mindset

Savings is not optional. Treat it like a bill you must pay yourself every month, just like rent or electricity. This mindset shift is the first step toward financial independence.

2. Pay Yourself First

The golden rule: save before spending. Automate savings by transferring a fixed percentage (say 20% of your salary) into a savings account or SIP.

Example: If you earn ₹25,000/month, saving 20% means ₹5,000 goes into your savings before you touch the rest.

3. Budget Smartly

Follow the 50-30-20 rule:

50% → Needs (₹12,500 for rent, bills, food)

30% → Wants (₹7,500 for entertainment, shopping)

20% → Savings/Investments (₹5,000)

Tracking your expenses weekly can prevent money leaks and help you stick to this plan.

4. Build an Emergency Fund

Life is unpredictable. An emergency fund of 3–6 months of expenses ensures you can handle crises without debt.

Example: If your monthly expenses are ₹20,000, aim for a fund of ₹60,000–₹1,20,000 in a liquid account.

5. Make Money Grow

Savings alone isn’t enough—invest to benefit from compounding.

Example: Saving ₹5,000/month for 10 years at 8% annual return:

Total invested: ₹5,000 × 120 months = ₹6,00,000

Approximate growth: ₹9,00,000

Even small amounts grow significantly over time.

6. Stay Consistent

Consistency beats timing the market. Avoid impulse spending and unnecessary loans.

Example: Saving just ₹3,000/month at 7% annual growth for 20 years:

Total invested: ₹7,20,000

Approximate value after 20 years: ₹16,80,000

Final Thoughts

Disciplined savings is about habit, not luck. Start small, stay consistent, and let time turn your efforts into financial security and independence. Your future self will thank you.

A penny stock to have a look

Vikas Ecotech Limited (VEL) has acquired Shamli Steels through a share swap, issuing 38 million new shares at Rs 4.20 each to Shamli Steels' shareholders. This valued Shamli Steels at Rs 160 crore and made it a wholly-owned VEL subsidiary. Separately, VEL's subsidiary Vikas Organics secured a Rs 165 million export order for vinyl plasticizers, while VEL is upgrading VOPL's facilities to boost production and expand its global market presence.

The company has a market cap of over Rs 700 crore. The stock’s 52-week high is Rs 5.63 and its 52-week low is Rs 2.82. The stock is up by 54 per cent from its 52-week low of Rs 2.82 per share. Investors should keep an eye on this penny stock.

Disclaimer: The article is for informational purposes only and not investment advice. 

Education and Healthcare as Businesses in India: A Critique and Analysis

 

Introduction

Since India's independence, education and healthcare have gradually transformed from public services to profitable enterprises. This shift has significantly impacted common Indians, often exacerbating inequalities and limiting access to quality services.

Education

Commercialization and Access

High Costs: The rise of private educational institutions has led to exorbitant fees, making quality education a privilege for the affluent. Families from lower-income groups struggle to afford these fees, often resorting to loans or other financial sacrifices.

Public vs. Private Quality Gap: 

Public schools and colleges suffer from chronic underfunding, resulting in inadequate infrastructure and staffing. This contrasts sharply with well-funded private institutions, leading to a dual education system where only the wealthy can access superior education.

Profit Motive

Rote Learning and Coaching Centers: The focus on high-stakes entrance exams has fueled the growth of coaching centers that emphasize rote learning over critical thinking. This commercial approach undermines the holistic development of students.

Lack of Regulation: Many private institutions operate with minimal oversight, leading to issues such as capitation fees and arbitrary fee hikes. This regulatory gap allows for exploitation and prioritization of profit over educational outcomes.

Healthcare

Privatization and Inequality

High Treatment Costs: The privatization of healthcare has resulted in advanced medical facilities being available primarily through expensive private hospitals. Common Indians often find these services unaffordable, leading to financial distress or untreated health issues.

Public Healthcare Strain: Public hospitals are overcrowded and under-resourced, offering substandard care. The stark disparity between public and private healthcare creates a two-tier system where the poor receive inferior treatment.

Medical Education and Workforce-

Commercialized Medical Education: Private medical colleges charge high fees, making medical education inaccessible to many. This commercialization impacts the quality and distribution of healthcare professionals, as those from affluent backgrounds dominate the sector.

Insurance and Coverage Gaps: Health insurance, while growing, is often insufficient and complex. Many common Indians remain uninsured or underinsured, facing significant out-of-pocket expenses for medical care.

Impact on Common Indians

Economic Burden

Debt and Financial Strain: The high costs of education and healthcare place immense financial pressure on families. Many incur debts or deplete savings to afford these essential services, impacting their overall financial stability.

Intergenerational Inequality: The commercialization of these sectors perpetuates social and economic inequalities. Wealthier families can afford better education and healthcare, while poorer families remain trapped in cycles of poverty.

Quality of Life

Mental Health Issues: The financial and academic pressures associated with accessing quality education and healthcare contribute to mental health problems. Students and parents alike face stress, anxiety, and other psychological issues.

Limited Opportunities: Inaccessible education and healthcare limit personal and professional growth opportunities. Talented individuals from lower-income backgrounds often cannot pursue higher education or receive adequate medical care, stifling their potential.

Conclusion-

The commercialization of education and healthcare in India has led to significant challenges for common Indians. Addressing these issues requires comprehensive reforms:

Strengthening Public Institutions: Increased funding and improved infrastructure for public schools, colleges, and hospitals can bridge the quality gap between public and private sectors.

Regulatory Reforms: Robust regulations to control fees, prevent exploitation, and ensure quality in private institutions are essential.

Equitable Policies: Policies promoting affordable private sector solutions, scholarships, and financial aid can enhance access to quality education and healthcare for all.

By implementing these measures, India can mitigate the adverse effects of commercialization and ensure that education and healthcare serve as foundations for inclusive and sustainable development.

Understanding the Recent Stock Market Decline in India: Causes and Implications

 The Indian stock market experienced a significant downturn yesterday, sending shockwaves across investors and financial experts alike. This sudden decline has raised concerns and questions about the factors contributing to this downward trend and its potential implications on the economy. In this article, we will delve into the reasons behind yesterday's stock fall in India and explore its broader impact.

Market Volatility: Financial markets are inherently volatile, influenced by a myriad of factors ranging from economic data and geopolitical events to investor sentiment. India's stock market, like others globally, is susceptible to these fluctuations. Yesterday's stock fall can partly be attributed to this inherent volatility.

Global Economic Factors: Global economic events and decisions by major economies, such as changes in interest rates, trade policies, and geopolitical tensions, can significantly impact the Indian stock market. Trade disputes, economic slowdowns in key trading partners, or geopolitical tensions can trigger investor apprehension, leading to a sell-off.

Domestic Economic Indicators: Domestic economic indicators, including GDP growth, inflation rates, and employment figures, play a crucial role in shaping investor confidence. Any adverse data or unexpected shifts in these indicators can lead to market uncertainty, causing a decline in stock prices.

Corporate Performance: The performance of individual companies listed on the stock exchange also affects market dynamics. Disappointing earnings reports, management issues, or unanticipated losses can lead to a sell-off of company stocks, dragging down market indices.

Regulatory Changes: Changes in regulatory policies, tax reforms, or government initiatives can impact investor sentiment. Investors closely monitor government decisions and policies, as these changes can have far-reaching consequences on businesses and the overall economy.

Investor Sentiment: Investor sentiment plays a crucial role in shaping market trends. Positive sentiment can drive stock prices up, while negative sentiment can lead to a market sell-off. Factors like news reports, social media trends, and public perceptions can influence how investors perceive the market.

Implications and Precautions: A sudden stock market fall often prompts investors to reassess their portfolios and risk tolerance. Diversification, staying informed about market trends, and consulting with financial advisors are essential steps for investors to safeguard their investments during periods of market volatility.

Conclusion: While yesterday's stock fall in India may be disconcerting, it is essential to understand that financial markets are inherently cyclical. Ups and downs are part of the natural rhythm of the market. Investors, both individual and institutional, must remain vigilant, stay informed, and make well-informed decisions to navigate these fluctuations successfully. Additionally, policymakers and regulators must continue to monitor market dynamics and implement measures that promote stability and confidence within the financial sector.

Financial knowledge is not the problem in India, but financial attitude is

You might know a lot about finance, but that doesn't necessarily mean you have the right attitudes towards managing your money. That seems to be the message from the survey on financial literacy carried out by researchers from the Reserve Bank of India. The study, titled ‘Financial Literacy in India: Insights from a Field Survey', was published in this month's RBI Bulletin. The research studied three components of financial literacy—financial knowledge, financial behaviour and financial attitude. While the scores for the first two parameters are decent, the survey's respondents had a low score in financial attitude.

The financial knowledge tested was about basic financial concepts, such as inflation, the relationship between risk and return, portfolio diversification and about the RBI Ombudsman. The financial behaviour of those surveyed was assessed based on how they manage their household budgets, saving behaviour, managing the cost of living and evaluating options while selecting financial products.

Financial attitude, on the other hand, was measured by the response to three specific statements: 1) You tend to live for today and let tomorrow take care of itself, 2) You find it more satisfying to spend money than to save it for the long term and 3) You are prepared to risk some of your own money when saving or making an investment.

The researchers found that respondents scored 3.8 out of 5 in financial knowledge, which isn't bad at all, considering that a survey for 12 OECD countries in 2020 had a score of 4.6 out of 7. The OECD, or the Organisation for Economic Co-operation and Development is also known colloquially as the ‘rich countries' club.' Respondents in the RBI study had the lowest score in their understanding of the diversification concept. Educated and richer persons had better financial knowledge, as did those who resided in metropolises. That is hardly a surprise. Retired persons were financial savvy, perhaps because necessity forces them to be.

For financial behaviour, the researchers found the score to be 6.65 out of 9, well above the OECD score of 5.3 out of 9. With very little social security in India, people have to willy-nilly behave well financially.

The anomaly lies in financial attitudes. The average score for financial attitudes is a mere 1.97 out of a maximum of 5. Compare that to the OECD minimum score of 3 out of 5. In the RBI survey, only 25 per cent of the respondents scored 3 or more. Clearly, our financial attitudes are all wrong.

That is surprising, because behaviour is usually a result of your attitude. Surely, if your attitude towards finance is negative and reckless, your behaviour should reflect that. The OECD International Survey of Adult Financial Literacy says, ‘even if an individual has sufficient knowledge and ability to act in a financially prudent way, their attitudes will influence their decision of whether or not to act.' The RBI researchers do not say anything about the gap between attitude and behaviour.

Perhaps the clue lies in the questions being asked of respondents to gauge their financial attitudes. For instance, of course people will find it more satisfying to spend money than to save, they may prefer to live for today rather than worry about tomorrow and people may really be prepared to risk some of their money in investments. But when it comes to financial behaviour, they find that they cannot afford to do any of these things. That could be a reason for the gap between attitude and behaviour. Could it also be that having a reckless attitude towards finances may, sooner or later, affect financial behaviour as well?

The survey also shows that homemakers have little financial knowledge, but they have positive financial attitudes and good financial behaviour.

On the other hand, daily wage workers have some financial knowledge, but poor financial attitudes and behaviour. That only goes to show that, as long as you are financially constrained, financial knowledge can only get you so far.

The RBI researchers recommend, ‘FL (Financial Literacy) camps must target to enhance knowledge of female respondents and of those residing in semi-urban areas; and target attitude development for remaining respondents' groups so as to benefit the entire population in deprived areas.'

Government postpones higher TCS on overseas spends by 3 months to October 1

As per the latest clarification from the finance ministry, if a person is overseas and spends through the credit card, it would not count under LRS and therefore would not attract TCS. Further, if a person uses credit card while in India for permissible overseas transactions, then that would count under LRS and attract TCS if it exceeds Rs 7 lakh in a year.