I invested ₹50,000 a year ICICI Life Stage Pension Fund. There is no insurance on it. I want to redeem it now. Will the entire fund value be added to income for tax purposes? What if the same sum is reinvested into another ULIP?
- Raman Tandon
As this is a retirement saving, and withdrawals will suffer heavy tax, you should reconsider your decision to surrender it early. If you surrender your pension plan before maturity, the entire surrender value will be added to your annual income and taxed as per your tax slab. Also, you will have to pay back the tax exemptions you would have availed on the premiums paid until now. Apart from this, two thirds of the surrender value is to be compulsorily used to purchase an annuity plan. All these terms apply even if you intend to use the funds to buy another ULIP.
This article was originally published on April 30, 2015.
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