The GST changes approved in September 2025 affect more than just tax calculations; they impact everyday financial decisions. Some costs drop to zero, others stay put, and a few shift quietly behind the scenes.
Understanding the GST impact on investments, what changed, what didn’t, and what you should do next can help you protect returns and avoid missing easy savings.
What Actually Changed in 2025 (for Investors)
Individual Life and Health Insurance: GST Cut to 0%
From 22 September 2025, premiums on individual life and health insurance policies are now GST-exempt under the new GST rules. Group policies, however, still attract GST. Reinsurance of individual policies is also exempt.
Expect lower upfront premiums, but note that insurers lost input tax credit (ITC), which has changed how they handle distributor commissions.
What this Means:
- Your personal term or family floater premium should fall by the GST amount that was previously embedded (often around 18% on the risk portion).
- Some insurers are offsetting the lost ITC by treating commissions as GST-inclusive, which reduces agent payouts rather than increasing your price.
3 Places Where GST Did Not Change (but Still Affects Returns)
1. Mutual Funds: GST Still Applies Within the TER
GST at 18% continues on taxable service components such as fund management fees and administration costs. It is already built into the Total Expense Ratio (TER), meaning your NAV reflects this daily. You do not pay it separately, but it still impacts your long-term returns as per the GST changes.
2. Stock and ETF Trading: GST Still 18% on Certain Charges
Brokers continue collecting 18% GST on brokerage, exchange transaction charges, and SEBI fees. Security Transaction Tax (STT) and stamp duty remain outside GST. This setup has been unchanged since the 2022 update, when SEBI fees were first brought under GST.
3. Gold and Jewellery: GST Framework Unchanged
Purchasing gold jewellery still attracts a 3% GST on the value and a 5% GST on the making charges. While prices vary by jeweller, the overall structure remains the same. (Import duty and other levies are separate.)
3 Places Where Investors Will Feel the GST-Enforced Change First
1. Insurance Cash Flows and Protection Budgets
A family paying ₹25,000 annually for a term plan earlier saw roughly ₹4,500 as GST on the risk portion. With 0% GST on individual policies, the same cover now costs less.
You can either save the difference or increase your sum assured for the same outlay. Watch for insurer communication and revised premium charts after 22 September.
2. Advice and Distribution Dynamics
Since insurers can no longer claim ITC, many are treating commissions as GST-inclusive. This effectively cuts intermediary payouts by the GST amount.
While this should not increase premiums (the Council’s goal was consumer relief), it may change how products are recommended by agents and online platforms.
Always evaluate products based on their benefits, cost efficiency, and claim record, not commissions.
3. Everything Else (Funds, Trading, Gold)
No rate relief has been introduced here. The drag remains:
- Funds: TER, which includes GST on fees, is a silent compounding cost. Prefer lower-cost categories or direct plans where suitable.
- Trading: Short-term traders still face 18% GST on brokerage and exchange charges. High-turnover strategies feel the pinch the most.
- Gold: The 3% GST makes jewellery a less efficient “investment” compared to gold ETFs or Sovereign Gold Bonds.
Key Dates and Scope You Should Note
- 22 September 2025: The Council’s GST changes take effect. Individual life and health insurance premiums become GST-free. Rollout may be phased for other sectors. Group insurance remains taxable.
- No Change: No adjustments were announced for mutual fund management fees, brokerage charges, or gold/jewellery GST for investors.
4 Practical Portfolio Moves (Simple, Evidence-Based)
- Re-Quote Your Insurance
With 0% GST, recheck your term and health premiums. You may now get higher coverage for the same cost or simply pay less for the same policy. - Audit Fund Costs
The TER compounds over time. Where suitable, move to direct or low-cost passive plans to reduce the GST-loaded expense ratio. - Mind Trading Frictions
For frequent traders, remember that GST applies to brokerage and exchange charges. Factor it into your breakeven and reduce overtrading. - Gold: Separate Use vs. Investment
Jewellery is consumption, not investment. For financial exposure to gold, use ETFs or Sovereign Gold Bonds (SGBs) that avoid making charges and offer tax efficiency.
Let’s Summarise GST Changes and How they Impact Your Investments
- Big Win: 0% GST on individual life and health insurance from 22 September 2025. Group policies remain taxable.
- Behind the Scenes: Insurers losing ITC are adjusting distributor commissions; premiums for individuals should still fall.
- Unchanged: Mutual fund TER includes GST on fees, the trading ecosystem continues with 18% GST on chargeable legs, and the gold GST structure remains unchanged.
Get the BellWether Expertise on Investments and Returns
If you’d like a professional perspective on how these GST changes impact your investments, fund costs, insurance, or overall portfolio, connect with a BellWether Wealth Manager in Delhi NCR.
A short review of your cash flows can highlight where you’re saving post-2025 and where hidden frictions still remain.
FAQs About GST Changes and Their Impact on Investments
1. Does 0% GST Change Insurance Tax Benefits (Section 80C/80D)?
No. These are income tax provisions, not GST. Your deduction eligibility remains unchanged because the reform targets pricing, not tax savings.
2. Will Insurers Offset the Benefit Elsewhere?
The Council’s intent is consumer affordability. Early signs show insurers adjusting commissions to absorb lost ITC, not raising premiums. Review revised premiums and compare carefully.
3. Are Mutual Funds Now Cheaper?
No. The GST on the expense line remains built into the TER. Your cost is still determined by fund expenses, loads, and holding period.
4. Are Bond ETFs Affected by GST?
Yes. Trading them still involves 18% GST on brokerage and exchange/SEBI fees. Fund-level expenses also include GST within the TER, similar to mutual funds.
5. What About Gold. Is there any GST impact on gold investments?
No change here. You still pay 3% GST on gold value and 5% on the making charges for jewellery. For cleaner exposure, consider ETFs or Sovereign Gold Bonds, which follow different tax rules.
