Quick Summary
Bringing clarity in income on redemption of Unit Linked Insurance Policy Clause (10D) of section 10 provides for income-tax exemption on the sum received under a life insurance policy, including bonus on such policy. There is a condition that the premium payable for any of the years during the terms of the policy should not exceed ten per cent of the actual capital sum assured. 2. It may be pertinent to note that to restrict the benefit of exemption under clause (10D) of section 10, to small
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FAQ :
The amendments aim to provide clarity on the taxation of Unit Linked Insurance Policies (ULIPs) when they are no longer eligible for tax exemption under Section 10(10D).
These amendments will take effect from April 1, 2026, and will apply to the assessment year 2026-27 and subsequent assessment years.
ULIPs issued on or after February 1, 2021, where the aggregate annual premium exceeds £2,50,000, and which do not qualify for exemption under Section 10(10D), will be subject to capital gains tax.
These ULIPs will be considered capital assets, and any profits or gains from their redemption will be charged to tax as capital gains.
No, the changes specifically apply to ULIPs issued on or after February 1, 2021, where the annual premium exceeds £2,50,000 and they do not meet the criteria for exemption under Section 10(10D).
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