ULIP is a Unit Linked Insurance Policy. Until 31.1.21,all amount received with respect to ULIP on maturity/death/withdrawal is totally exempt u/s 10(10)(D).

But in Budget 2021-22, an amendment has been introduced. So following points need to be considered w.e.f.1.2.21:

1. W.e.f.1.2.21 if any person takes a ULIP wherein the total premium for the policy is more than 2.5 lakh in any of the years of the policy term, then the same is not exempted.

2. If the person holds more than 1 ULIP then exemption is to be calculated policy wise and not person wise. For example, if a person has taken 5 ULIP on or after 1.2.21,and total yearly premium for only 1 ULIP is more than 2.5 lakhs, then exemption can be taken with respect to other 4 ULIPs only.

3. The above clauses are not applicable on death of person. So in time of death the amount received will be totally exempt irrespective of the premium.

4. The taxable ULIP will be a capital asset and will be treated the same was as an equity oriented mutual fund is treated. The method of calculation will be notified by ITD in due course.

5. STT will be applicable on maturity or partial withdrawal amount.

Author Bio

Qualification: CA in Practice
Company: Raksha Agarwal and Associates
Location: Siliguri, West Bengal, IN
Member Since: 06 Nov 2020 | Total Posts: 1

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February 2021