Taxation of gain on surrendering the ulip-1971

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 June 2013 To: Caclubindia.com

Dear Sir,

Sub: Clarification regarding maturity proceeds of UTI-ULIP Plan 1971.

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I am 62 years of age. I had joined the above UTI – ULIP Scheme on 25-01-1999 with an annual contribution of Rs.7,500/- for a period of 10 years. Every Year after taking a sum of Rs.510/- towards insurance the balance was invested and units allotted accordingly. No insurance amount was taken for the remaining 3 years as per the scheme. Further they have also allotted only Bonus Units periodically. No dividends so far.

Now the above scheme matured on 25-01-2009,but I am continuing in the scheme to reap the benefit of better NAV and maximizing my returns.

UTI -ULIP 1971 is not a Equity linked scheme but having Debt and equity ratio of 60:40. Hence I fear that there will be long term capital Gains tax but we can have the option of indexation benefit. I presume that the Bonus given periodically is also subject to the same tax treatment.

If now, when I redeem the Units, what will be my Tax implications and if at all any,how it is to be calculated.

kindly clarify at your earliest.

Thanking you,
Yours faithfully,
V.ARUNACHALAM
25-06-2013

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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25 June 2013 The capital gains arising on transfer of the units will be taxable and indexation will be allowed.
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According to the amount invested for the number of units allotted in respective years, LTCG may be calculated.
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Querist : Anonymous

Querist : Anonymous (Querist)

28 June 2013 Fear Sir,

Thank you very much for your reply with regard to maturity proceeds of ULIP 1971. However I have one unrelieved query. What about Bonus Units? How LTCG are taxed for them? They do not have any cost. How can I use the indexation benefit for the Bonus Units on surendering.

V. Arunachalam
28-06-2013