Taxability of ULIP purchased after April 1, 2012 & before 1 Feb 2021

[MAHTAB KHAN]

Dear expert please suggest about this issue.

A ULIP purchase on 28-09-2014 for 10 years.

• Annual premium: Rs. 50,000

• Total premium paid: Rs. 5,00,000

• Sum assured: Rs. 3,50,000

• Maturity amount received on 29-09-2024: Rs. 12,80,557

• Net gain: Rs. 7,80,557

Since the sum assured is less than 10× the annual premium, will this maturity amount be taxable as capital gains or as other source.  Considering the policy was purchased before 1 Feb 2021.

AI Summary

ULIP maturity payout for pre-1 Feb 2021 policy: is Rs12.8 lakh proceeds taxable, and under which head? A taxpayer seeks clarification on the income-tax treatment of maturity proceeds from a unit linked insurance policy (ULIP) purchased on 28-09-2014 for a 10-year term, where the annual premium is Rs.50,000 and the sum assured is Rs.3,50,000 (alleged to be less than 10 times the annual premium). Maturity proceeds of Rs.12,80,557 were received on 29-09-2024 against total premiums of Rs.5,00,000, resulting in a net gain of Rs.7,80,557. The query specifically asks whether, given the policy inception before 01-02-2021, the maturity proceeds are taxable and, if taxable, whether they should be assessed as capital gains or as income from other sources.