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 proceeds taxable as income from other sources when issued before 1 Feb 2021 without the policy-proceeds exemption.
A ULIP issued on 28-09-2014 with sum assured below ten times the annual premium does not receive the policy-proceeds exemption. Policies issued before 1 February 2021 are not treated as capital assets except where specific provisos apply. Therefore the maturity gain (maturity proceeds minus premiums paid) is taxable as Income from Other Sources rather than as capital gains.