From April 1, a seller of unit-linked insurance plans (Ulips) will be able to make a stronger pitch to the potential customer – no long-term capital gains (LTCG) tax on investing. The Union Budget 2018 has imposed an LTCG tax of 10 per cent on investors in stock markets who sell their shares after one year. However, it has kept insurance products out of the ambit of this tax. And this could lead to more mis-selling in Ulips. At present, Ulips have three things going for them. One, a robust stock market. Two, there are more insurance than mutual fund agents who can push Ulips, and now, the tax arbitrage. And given that insurance agents are paid significantly higher commissions, there could be a rush to push these products.
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