SBI Life, HDFC Life, ICICI Pru Life: Life insurance stocks rise after firms share updates on GST rate rejig; check details

HDFC Life Insurance Company was trading 0.62% higher at ₹758.90 on the NSE, while shares of SBI Life Insurance Company were up 0.88% at ₹1,806.90 apiece. ICICI Prudential Life Insurance Company was trading 0.63% higher at ₹603.55 on the NSE.

The companies also shared the impact they would have on their businesses after the new GST regime.

Announcing the outcome of the 56th GST Council meeting, Finance Minister Nirmala Sitharaman said all individual life insurance policies, whether term life, ULIP or endowment policies, and subsequent reinsurance are exempt from GST.

HDFC Life

The company, in its exchange filing on Thursday, post-market hours, said they welcome the GST rate changes by the government on all individual life insurance products. This significant reform lowers the cost for customers, thereby encouraging them to purchase much-needed life insurance and help protect themselves and their families.

"While we begin transitioning our systems and products to the new regime w.e.f. September 22, 2025, we believe that this change will spur demand over time and hence be accretive to our Value of New Business (VNB). We expect a non-material (less than 0.5%) impact on our Embedded Value (EV). As we have done in the past, we will continue to work towards our aspiration of doubling our Value of New Business over 4 to 4.5 years," HDFC Life said in its filing to stock exchanges.

To 'be accretive' means to cause a gradual increase in value, amount, or earnings.

Overall, this reform is structurally positive for the life insurance sector, as it is expected to drive higher penetration, improve persistency, and accelerate long-term growth in line with our sectoral vision of "Insurance for All by 2047," the life insurance firm added.

Embedded Value (EV) is a key metric used to measure the true economic worth of a life insurance company. It represents the present value of all future profits that the company expects to earn from its existing policies plus the company’s current net worth.

True economic worth means it doesn’t just look at the balance sheet today (like shareholders’ equity or book value). Instead, it also includes the economic value of future profits the company is expected to earn from existing policies already sold.

So, true economic worth equals present tangible value plus future profit potential from current business.

SBI Life

SBI Life said the company welcomes the reform, recognising it as a profoundly meaningful step towards making insurance more affordable and ensuring financial security is accessible to all. This aligns with the sectoral vision of “Insurance for All by 2047”.

"With the new regime set to begin on September 22, 2025, we are aligning our products and processes to ensure a smooth transition. The company foresees a minimal impact of less than 0.2% on embedded value. Furthermore, the company anticipates that this change will stimulate demand over time and positively impact the long-term value generation," it added.

ICICI Pru Life

The company said the Goods & Services Tax (GST) council, in its meeting held on September 3, 2025, has approved individual life insurance policies to be exempted from GST with effect from September 22, 2025.

"We welcome this landmark reform aimed at making life insurance affordable and accessible to a wider section of society. We believe that this customer-centric reform will boost life insurance growth and deepen insurance penetration in our country," the company said.

The company added, "We believe that the improved affordability and accessibility of life insurance policies is expected to increase demand and be value accretive for the company. We expect an impact of approximately 1% on our embedded value."

What tax experts are saying

Life and health insurance firms will have to reverse the Input Tax Credit (ITC) accumulated till September 21, 2025, after the GST exemption kicks in, raising the cost burden on companies, according to tax experts.

The finance ministry, in a set of FAQs issued after the 56th GST Council meeting, said businesses whose outward supply has been exempted after the GST rate rationalisation will have to reverse their ITC, which is accumulated in their ledger.

The accumulated ITC can be utilised only to discharge outward liability for supplies of goods/services, or both, made till September 21, 2025, the ministry said.

Whenever the insurer issues a policy and collects a premium, that is an outward supply of insurance service under GST.

Under GST, Input Tax Credit (ITC) means that if a business pays GST on inputs (purchases, services, expenses), it can set this off against the GST it collects on its outward supplies (sales/services).