Tax treatment of ULIP

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bhola muraw (Querist)
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29 December 2009 Dear Sir,
Please tell me whether what is the tax treatment of ULIP at the time of maturity of ULIP? Please refer section also
thanks

Arjuna Raina

Arjuna Raina (Expert)
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29 December 2009 he proposed S.80C:
The new Section provides a deduction not exceeding Rs One lakh to an individual and an HUF, in respect of the following payments

1.Contribution to ULIP (including payment made in respect of spouse and children of the assessee and in respect of HUF, any member of the family

2.Contribution to unit-linked insurance plan of the LIC Mutual Funds (including payment made in respect of spouse and children of the assessee and in respect of HUF, any member of the family);

3.Annuity plans of LIC or other insurers;

4.Subscription to units of mutual funds notified u/s 10(23D);

5.Contribution to pension funds notified u/s 10(23D);

6.Subscription to deposit schemes and contribution to mutual funds set up by National Housing Bank;

7.Subscription to the deposit schemes of notified public sector housing finance companies, or authorities dealing with housing accommodation

8.Tuition fees paid to any university, college or other educational institution situated within India (in respect of any two children of the assessee
Etc
etc
etc

bhola muraw

bhola muraw (Querist)
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29 December 2009 but at the time of maturity of ULIP what will be the tax treatment?

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Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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29 December 2009 The units of ULIP are capital asset under Incomr tax Act,1961 and its sale before one year gives rise to short term capital gains which is taxable.
However,if the units are > one year old , the sale will raise long term capital gains . Mutual Fund will certainly deduct STT on the redemption of the units, and that makes the gains tax free u/s 10(38) of the Income tax Act, 1961.