Ask Value Research

Will surrender of ULIP be taxed?

You will not be taxed for the surrender of your ULIP plan

I surrendered my ULIP policy after 5 years, which was issued in 2011. Premium paid was 20 percent of the sum assured. Can I claim long term capital gain on the additional amount over and above the premium. No tax benefit u/s 80C was claimed.
-Sharad Mohan

For taxation, Unit Linked Insurance Policies (ULIPs) are considered as life insurance policies. Once you complete the 5 year lock in period, the surrender value of ULIPs will be tax-free under section 10 (10D). This is irrespective of the 80C tax deduction claimed for the premiums. Also, the ULIP surrender will not qualify for long term capital gain.

This article was originally published on February 08, 2017.

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