Updated Feb 02, 2021 | 07:31 IST
Presently proceeds received on life insurance policies including ULIPs enjoy tax exemption under section 10(10D) if the premium for the policy does not exceed 10% of the sum assured. Representational image
The finance minister has proposed amendments in the Income Tax Act in an attempt to make the Unit Linked Insurance Policies (ULIP) issued by life insurance companies on par with listed equity investments.
Present Provisions
Presently proceeds received on life insurance policies including ULIPs enjoy tax exemption under section 10(10D) if the premium for the policy during the premium paying term does not exceed 10% of the sum assured. So as long as the premium paid does not exceed 10% of the sum assured the money received in respect of such policies is fully tax-free in the hands of the policyholder. However, death claims received are fully tax-free irrespective of the quantum of premium paid.