Capital gains computation for unit linked insurance payouts defines taxable amount and premium adjustment rules. First receipt under a specified unit linked insurance policy is taxed as capital gains equal to the amount received (including bonus) less aggregate premiums paid to date; later receipts are taxed as capital gains equal to the amount received (including bonus) excluding previously considered amounts less aggregate premiums to date reduced by premiums already considered for earlier receipts. These computed amounts are deemed to be capital gains from transfer of a unit of an equity oriented fund under the unit linked insurance policy.