I opted for ICICI Pru Wealth Builder - II ULIP plan a year ago and payed my first annual premium of ₹50,000. I don't plan to pay more premium as I have figured out that I am better off investing the same amount in equity mutual funds. However, since I claimed tax deduction under Section 80C for the premium amount, will I have to file a revised return? What are the further tax implications?
If you surrender your policy now after a year, deductions claimed earlier will be added to your income and taxed accordingly. If your sum assured is 10 times or more the premium paid (₹50,000), your receipts will be tax-free. Otherwise, you will be taxed as per your income tax slab rate. For more details on taxation of insurance policy, click here.
You will also pay a surrender penalty.
Do not buy insurance products for investment purpose in future. Always buy a term insurance plan to buy a life insurance cover. And invest in an equity mutual fund schemes to achieve your long term financial goals.