If you pay a premium of over 2.5 lakh rupees in a year in ULIP (ULIP) then the tax exemption available under section 10 (10D) has been removed.
new Delhi. There is important news for those who invest in unit linked insurance policy i.e., unit linked insurance policy. If you pay a premium of more than 2.5 lakh rupees in a year in ULIP (ULIP) then the tax exemption available under section 10 (10D) has been removed. However, this rule will not apply to existing ULIPs. However it will be effective on policies sold after 1 February 2021. Capital Gains on the
budget and ULIP
ULIPs will be taxed in the same way as mutual funds are taxed. Gains worth more than Rs 1 lakh in any one financial year attract 10% long term capital gains tax. From now on, ULIPs with an annual premium of more than 2.5 lakh rupees will not get this benefit of tax exemption.
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What is ULIP?
ULIP is a unit linked insurance product where insurance and investment benefits come together. They are offered by insurance companies. When you pay the ULIP premium, a part of it is used by the insurance company to provide you insurance coverage and the rest is used to invest in debt and equity. The combination of insurance and investment in ULIPs comes with a lock-in period of 5 years.
