News From Press Taxability of some insurance policies remains ambiguous

Taxability of some insurance policies remains ambiguous

Some tax experts believed that gains from policies where the sum assured is less than 10 times the annual premium should be offered to tax under the head 'income from other sources'.

Mint Feb 5, 2021

For many years now, unit-linked insurance plans were taxed where the cover was less than 10 times the premium. Suppose you paid an annual premium of ₹1 lakh. But the sum assured on the policy was less than ₹10 lakh. The policyholder had to pay tax on the gains. Until now, it was not clear whether such gains would be taxed as capital gains or income from other sources. The recent Budget settles this issue partially and brings clarity on the taxation of such Ulips.

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