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Taxation of redemption of ULIP after lock-in-period of 5 years

430 views 3 replies

A P

5 Points Joined July 2024

I have purchased some Ulip policies in August 2019 with premium paying term of 5 years and policy period varying from 10 years to 15 years. If I redeem the ULIP after lock-in-period of 5 years, ie. BEFORE the end of policy period, then

1) is the capital gains in the redemption value taxable

2) if it is taxable as LTCG, will indexation apply?

regards

Abhik Pal

Replies (3)

Abhishek Arthur

50 Points Joined June 2019

ULIP issued on or after 01/02/2021 are considered for capital gain taxation. In other cases check the applicability of 10(10D) exemption

A P

5 Points Joined July 2024

Thanks Mr Abhishek. My ULIPS are purchased before 01/02/2021 and in the new regime I understand Section 10D is not applicable. So in my case will LTCG be imposed if I sell it after 5 years but before policy term?

Abhishek Arthur

50 Points Joined June 2019

Section 10D exemption is not withdrawn for new tax regime, from April 2023 where policies issued after this date where premium exceeds 5 lacs are taxable other than ULIPs, in other cases if the conditions are met it is exempt