TAX ON UNIT LINKED INSRANCE PLAN OF UNIT TRUST OF INDIA
This query is : Resolved
Pradeep Parekh
(Querist)
10 June 2025
I HAVE INVESTED IN UTI MUTUAL FUNDS ULIP PLAN OF 15 YEARS WEF 07.10.1993 TO 07.10.2008
iNSTALLMENT PAID EVERY YEAR RS.3000 X 15 YEAR = TOTAL AMOUNT INVESTED RS.45000/= 9TARGET AMOUNT)
I HAVE DONE REDEMPTION ON 24.04.2024 AND RECEIVED RS.450032.76
I AM SENIOR CITIZEN (77 YEARS
I WANTED TO KNOW THAT THIS AMOUNT IS TAXFREE OR I NEED TO PAY ANY LONG TERM CAPITAL GAIN WITHOUT ONDEXATION OR WITH INDEXATION.
REQUEST YOU TO PLEASE GUIDE ME PROPERLY
iNSTALLMENT PAID EVERY YEAR RS.3000 X 15 YEAR = TOTAL AMOUNT INVESTED RS.45000/= 9TARGET AMOUNT)
I HAVE DONE REDEMPTION ON 24.04.2024 AND RECEIVED RS.450032.76
I AM SENIOR CITIZEN (77 YEARS
I WANTED TO KNOW THAT THIS AMOUNT IS TAXFREE OR I NEED TO PAY ANY LONG TERM CAPITAL GAIN WITHOUT ONDEXATION OR WITH INDEXATION.
REQUEST YOU TO PLEASE GUIDE ME PROPERLY
12 August 2025
Tax treatment of ULIP redemption:
1. ULIP policy issued before 1st February 2021:
ULIPs issued before 01.02.2021 are tax-exempt under Section 10(10D) of the Income Tax Act, provided premiums do not exceed 10% of sum assured.
Since your policy started in 1993, it qualifies as a pre-2021 ULIP.
Hence, the entire redemption proceeds including gains are exempt from tax, irrespective of your age.
No tax is payable on maturity or redemption.
2. No Long Term Capital Gains tax applies:
Since the ULIP is tax-exempt under Section 10(10D), long-term capital gains tax (with or without indexation) does not apply on the redemption amount.
This applies to both principal and earnings.
1. ULIP policy issued before 1st February 2021:
ULIPs issued before 01.02.2021 are tax-exempt under Section 10(10D) of the Income Tax Act, provided premiums do not exceed 10% of sum assured.
Since your policy started in 1993, it qualifies as a pre-2021 ULIP.
Hence, the entire redemption proceeds including gains are exempt from tax, irrespective of your age.
No tax is payable on maturity or redemption.
2. No Long Term Capital Gains tax applies:
Since the ULIP is tax-exempt under Section 10(10D), long-term capital gains tax (with or without indexation) does not apply on the redemption amount.
This applies to both principal and earnings.
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