So somehow you managed to get trapped into buying a Unit Linked Insurance Policy (ULIP) in the name of Insurance! Now you want to sell the units and get out of it. Is this amount taxable?
Under ULIP units are bought from money invested in the policy. Units purchased are capital assets under the Income Tax Act. So if Units are sold within one year of Investment, you have to pay short term capital gains. So ensure that at least 1 year has passed from the last premium payment date before redeeming your units.
If the units are held for more than a year, they become long term capital gains and long term capital gains are exempt from tax. Securities Transaction Tax would be deducted at the time of redemption of Units.
Now, though we said they would be tax free it would depend on the type of fund the amount was invested in. If the amount was invested in equity oriented funds and held for more than 1 year then the capital gains are tax free, conversely if they are sold within 1 year the short term capital gains tax has to be paid.
Similarly, debt-oriented funds attract a long-term capital gains tax, while a short-term capital gain would be tax at the investor’s normal tax rate.
For details on ULIPs click here
For details on Taxability click here
3 comments:
Thank you for sharing such great information. It is informative, can you help me in finding out more detail on Ulip Insurance India,BestUlip Insurance PlanUlip Policy,i am interested and would like to know more about this field and wanted to understand the basics of ulip insurance policy.
Ritika,
Give me a call, we can discuss in detail.
Regards,
Wow! Your writing is really to the point, Keep your good work up. India business solution provides all kind of consultancy services to big and small business.
Consultancy Service Provider
Post a Comment