CBDT clarification on ULIP said no new rules in the notification – Business News India

of central government Budget In 2021, the Central Board of Direct Taxes (CBDT) has given a fresh clarification on the tax regime on Unit Linked Insurance Plans ie ULIPs. The department says that this new notification has been issued to remove the earlier ambiguities. So that taxpayers can get comprehensive information about this system.

According to the official related to the matter, these rules have been brought under the Finance Act 2021. In order to explain these rules in easy language, a notification has been issued on behalf of CBDT. These are not new rules at all. Income Tax Act Section 10 (10D) has been amended under the Finance Act 2021. After this, on or after February 1, if the annual investment in ULIPs exceeds Rs 2.5 lakh, then tax exemption will not be available on the return. According to the department, this arrangement has been made to bring parity between mutual funds and ULIP investments. It has also been made clear in the changes in the Finance Act that if someone has more than one policy, then the total premium in the financial year will remain in the limit of 2.5 lakhs.

Actually, there is a special kind of attraction among investors about ULIPs because it gives the benefit of both insurance and investment to the investor. A large number of people also invest in it to save tax. ULIP is a type of life insurance product. In this, the money invested by the customers in ULIPs is invested in assets like stocks, bonds. A part of this is also meant to provide life cover to the person insured.

Now under the new rules, tax exemption will be considered by adding the total premium of both new and old ULIPs for tax exemption. In any case, if the annual premium is more than Rs 2.5 lakh, then the benefit of exemption will not be available on investment above this. Also, capital gains tax will be applicable on the income earned from it.

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