ULIP taxation: Limited clarity on key aspects after Budget announcement Tax experts differ over the implications of early ULIP surrenders, debt fund options February 11, 2021 / 10:15 AM IST More than a week after the Union Budget 2021 announcements, Unit-linked insurance policies (ULIPs) continue to be under the spotlight. This is because ULIPs with annual premiums of over Rs 2.5 lakh will not hold the tax edge over equity mutual funds, starting February 1, 2021. Any gains made on ULIP investments were, so far, tax-free as section 10(10D) exempts proceeds received under life insurance policies from tax. However, long-term capital gains of over Rs 1 lakh on other equity-oriented investments (shares/ equity mutual funds) in a financial year attract 10 percent LTCG tax since 2018.