Kotak Assured Savings Plan
A plan that offer guaranteed returns and financial protection for your family.
Kotak Guaranteed Savings Plan
A plan that offers long term savings and insurance in one premium.
Kotak Lifetime Income Plan
Retirement years are the golden years of life.
Our representative will get in touch with you at the earliest.
In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Ref. No. KLI/22-23/E-BB/492
ULIP taxation refers to the tax rules on the maturity benefits of your ULIP. Read to know the new tax norms for capital gain on a unit-linked insurance plan (ULIP).
Unit-Linked Insurance Plans, also known as ULIPs, are investment products that offer insurance coverage along with the opportunity to invest in various market-linked funds. As the name suggests, the investment component of ULIPs is linked to the performance of underlying assets such as equity shares, bonds, or money market instruments.
Tax norms for capital gains on ULIPs
ULIPs have become a popular investment choice in recent years due to their dual benefits of life insurance coverage and the possibility of earning returns from market-linked investments. However, it is important for ULIP investors to understand the tax implications of their investment.
The returns from ULIPs are subject to ULIP taxation, just like any other investment instrument. The tax treatment of ULIP returns depends on the duration of the investment. If the ULIP policy is held for less than three years, the returns are treated as short-term capital gains and are taxed as per the income tax slab of the investor.
On the other hand, if the policy is held for more than three years, the returns are treated as long-term capital gains and are taxed at 10% without indexation or 20% with indexation.
ULIP tax benefits are offered to investors under section 80C of the Income Tax Act. The premium paid towards a ULIP policy is eligible for a tax deduction of up to ₹1.5 lakhs in a financial year. This means that the investor can reduce their taxable income by the amount of premium paid, effectively reducing their tax liability.
The ULIP capital gains tax arising from the sale of units is subject to ULIP taxation. The tax implications of capital gains depend on the duration of the investment and the applicable tax slab of the investor. If the ULIP units are sold before the completion of three years, the capital gains are treated as short-term capital gains and are taxed as per the applicable tax slab.
If the units are sold after three years, the capital gains are treated as long-term capital gains and are taxed at 10% without indexation or 20% with indexation.
As an investor, it is always important to understand the tax implications of the investments you make.
However, when it comes to taxes, ULIPs have some specific rules and regulations that investors need to be aware of.
Moreover, ULIPs have a lock-in period of five years, during which investors cannot make any changes to their investments. This means that investors cannot switch to a tax-efficient investment option even if they want to, which further eliminates the possibility of tax arbitrage.
ULIPs are an attractive investment option due to the combination of insurance coverage and market-linked returns. However, it is important for investors to understand the ULIP tax benefits and implications of their investment. By being aware of the tax norms for capital gains on ULIPs, investors can make informed decisions and effectively plan their finances.
In this policy, the investment risk in the investment portfolio is borne by the policyholder.
Ref. No. KLI/22-23/E-BB/521
