Benefit of Early Redemption on ULIP Taxable
2 years ago
I, Dilip Shah, retired, age is 63 years. My question is : I surrendered ULIP (Reliance Life Insurance policy) in 09 January 2021 which was taken, one in 26 July 2011 and second in 07 May 2014 paying single premium. Reliance has deducted 3.75% TDS as per IT section 194DA (26AS) on the income (total redemption amount - Premium paid) amount portion of the policy. ULIP was invested in equity by Reliance.
Now when I file the IT return for FY20-21, the income amount portion received from Reliance life Insurance policy is to be added to my other income and pay tax on total income or income received from Reliance is not to be added (i.e. tax free income) to my other income? Kindly advise at the earliest.
The income from ULIP is considered as income under the heading income from capital gains for the assessment of income tax. You can claim deduction under Sec 80C. However, it is advisable that you consult with a CA to calculate your exact tax liability.
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Ayantika Mondal @ Prime Legal
Responded 2 years ago
The income received from reliance is to be added under the heading income from capital gains and deduction under Section 80C is allowed for the investment made in ULIP. An Individual can claim a deduction for the investment made for himself, spouse or children (dependent or independent) and HUF can claim a deduction for the investment made for any member of HUF.
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