Could you please explain the tax implications of surrendering a single premium ULIP? I have surrendered a ULIP bought in 2010. Should I be paying tax on the total proceeds or only the net gain after the premium? I did not claim the Section 80C benefit in the year of purchase.
-K Sanjay Sinha
Most ULIPs (regular paying and single premium) have a lock-in period of 5 years and the proceeds are not taxed upon surrender. The tax benefits are more or less similar in single premium policies as in the regular ones. The surrender value of your ULIP will be also be tax-free.