ULIPs are now Taxable | Impact of Union Budget 2021 on ULIP's taxation

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Budget 2021 proposed to limit exemptions on proceeds from unit-linked insurance plans that have so far allowed large investors to receive tax-free returns. The Narendra Modi government proposed to amend the clause in the Income Tax Act pertaining to taxation of proceeds from ULIPs, according to the Finance Bill, 2021. For ULIPs taken on or after Feb. 1, the maturity proceeds of policies with an annual premium of more than Rs 2.5 lakh will be taxable on par with equity-linked mutual fund schemes. Individuals holding multiple ULIPs with an aggregate premium in excess of Rs 2.5 lakh will have to pay tax on the proceeds. ULIPs combine life insurance and investments into equity and debt. In the event of the policyholder’s demise, either the sum assured or proceeds of the investments, whichever is higher, are paid out to the nominee. This amount paid to the nominee, the government said, will continue to be tax free. Under the existing provisions, all proceeds from ULIPs are tax free, irrespective of the amount of premium paid by the individual.




💬 Comments
Author

Sir,
What if the existing ULIP?
And the policy premium is paid every year.
is it consider as new investment on existing policy ? And budget is applicable?

Or the budget is applicable to new policy taken in 2021-22?

Author — Sev Eight

Author

This budget amd gov is more focused on closing loop holes in existing system, they didn't increase tax just bcz they will gain from this..tht is a good news for honest citizens

Author — Prashant S

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Seems in future, LIC endowments will also become taxable..

Author — Satadal Chakraborty

Author

Sir ek video ispe ho jae : "Bad Bank" - asset reconstruction company as suggested in Budget 2021. How this will function/work ?

Author — Anshuman Pati

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please make video on impact of this announcement over PF/VPF contributions

Author — rashi agrawal

Author

What will be impact of HDFC LIFE INSURANCE and SBI LIFE INSURANCE?

Author — GOKUL GOPAN

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Hello Parimal Sir,
Could you please give some simple analysis on Abbott India?

Author — Jenish Samani

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Biggest Learning of this video: Investment and Insurance should be seperately managed. We should stay away from mixed product like ULIP

Author — manish gupta

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Does the 2.5L is inclusive of the 2.5L for PF/VPF that was just announced for this 10(10D) section or is this 2.5L separate from the 2.5L for PF/VPF that was announced?

Author — P R

Author

Video Request : Can you put out a LIFE insurance and General Insurance Sector analysis video their business model and all the things to keep an eye on P&L and balance sheets

Author — Arpan Vora

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Hi, Can you please discuss about annuity as a retirement option? It's returns and all because on policy bazaar, i am seeing some very high returns.

Author — Ankit sharma

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Sir can you tell me about ulip taxation for the following situation :

How tax will be calculated if anyone surrender ulip before locking period and the person has not taken any 80c tax benifits

Author — Goutam Ghosh

Author

What is the tax treatment about tax mutual funds?
Investment and redemption after 3 years?

Author — Abhist Deo

Author

Sir one video on 15G and the tax on dividends received (or to be received)
Please ❤️🙏

Author — Mithun Mahato

Author

Can you make a video on how to save tax on long term gain? I hv heard we can sell our share after an year up to 1 lakh of gain and buy it again after 2 days. that way we can save that years tax?

please help

Author — Gourav Mewara

Author

Sir I have one doubt..
Why reserves and surplus are counted in liabilities and not in assets.. Because reserves and surplus are just like cash which can be used anytime

Author — Anjali's aduge

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There's already GST on the payments, now this tax will crush investors. How Greedy can a government get?

Author — Jolly John

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What about all premium paid up Ulips? will this effect?

Author — Bharat soni

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Would this also affect existing ULIPs taken before 1 feb 2021 where premiums are more than 250k. Pls clarify. Txs in advance.

Author — Vishal L

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Applicable on next Financial year....?

Author — Pankaj Singh