All GST benefits will go to customers: HDFC Life

Following HDFC Life Insurance Company's second-quarter (Q2) 2025-26 (FY26) earnings, Vibha Padalkar, managing director and chief executive officer, speaks to Aathira Varier and Subrata Panda over telephone about the impact of the goods and services tax (GST) rate cut on insurance premiums, the withdrawal of input tax credit (ITC), and the company’s plans to mitigate these changes.

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Edited excerpts:

How has the GST cut and the withdrawal of ITC impacted the company in Q2FY26?

The removal of GST on insurance premiums is a monumental step because it reinforces the importance of life insurance in the minds of ordinary Indians. A developed nation cannot exist without adequate insurance coverage. The overall attractiveness of insurance should rise significantly. Early signs are encouraging: retail term product sales in September increased by over 50 per cent. Some of this may reflect pent-up demand, but if this trend continues, it will meaningfully boost growth. Clearly, the government's intent is coming through.

Regarding ITC, our backbook already shows a 0.5 percent impact on embedded value, roughly 260 crore. For new business, it will take a couple of quarters to neutralise this effect. However, we're confident of reaching a balanced position, similar to what we achieved with surrender charges. While there will be a gross impact initially, we've identified levers to offset it.

One of these levers is reduced distributor commissions?