ULIP SURRENDER TAXATION

This query is : Resolved

Chirag H. Thakkar (Querist)
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06 January 2022 If one discontinue to pay premium for ULIP after 3 years but receive amount after 5 years i.e maturity term. what will be the taxation effect?
What will be the taxation if 80C benefit not claimed?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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07 January 2022 The proceeds received under a life insurance policy including ULIP are exempt for tax under section 10(10D) of the IT Act, provided that the premium payable in respect of such policy does not exceed 10 per cent of the actual sum assured for any year during the policy term for policies issued after April 01, 2012.
It doesn't make any difference whether the claim u/s. 80C was opted or not, when it is surrendered after 5 years.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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07 January 2022 For the policy purchased after 1st Feb 2021 and the premium paid is above Rs 2.5 lakh.... In Budget 2021, it was announced that if the premium paid for ULIP is more than Rs 2.5 lakh, then proceeds would be taxed like capital gain.

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