| Question And Answer | |
|---|---|
| Subject: | Taxability of redemption of ULIP |
| Category: | Income-Tax |
| Querist: | Chetan |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Premium on ULIP policy, Taxability of redemption of ULIP |
| Date: | April 28, 2022 |
An NRI has never filed any return in india as he was not having any taxable income in india. In the year Nov 2011, he has paid a sum of Rs. 5 Lacks as Premium on ULIP policy being Single premium policy on sum assured of Rs. 6.25 lacks but as he has not filed any income tax return, no 80C was claimed. In year 2017-18, said NRI has received Rs. 9.75 being maturity proceeds to said ULIP policy and Insurer has also deducted tds of 1% on maturity proceeds.
The question is Whether the sale proceeds received by NRI on Single premium ULIP policy taxable in india or exempt. If it is taxable, how to calculate capital gain and what % tax will be applicable, whether indexation benefits available etc.
As per section 10(10D) of the Income Tax Act, 1961 (Act), the returns on Unit Linked Insurance Plan (ULIP) on maturity are tax-free. This is applicable only if the annual premium is less than 10 per cent of the capital sum assured for the plans purchased after April 1, 2012.
As the assessee received the amount in AY 2017-18, the sum received would be exempted under section 10(10D) of the Act.