Long term Capital Gains Tax (LTCG)

One cannot stress enough on the importance of choosing a good policy that meets both your insurance and investment needs. If you are looking for a single plan which fulfils this purpose, then United Linked Insurance Plans (ULIPs ) could be the thing for you.

ULIP capital gains tax

One of the special features of ULIPs is that it is exempted from capital gains tax, which is basically the Long Term Capital Gain (LTCG) tax, which was introduced in the Union Budget of 2018. ULIPs happens to be the only market-linked investment option that continues to remain exempted from the LTCG tax.

The tax benefits that are mentioned below make ULIPs an attractive investment option. With the additional feature and benefit of a life cover, it is a win-win situation for you. With other features such as partial withdrawal, fund switching, and top-up, ULIPs make for an ideal investment plan — even for those who are new to the investment scenario.

With ULIPs, you get access to two of the most significant needs — investment and security. With these two in order, your life will be one step closer to taking the ideal shape — something that you have been working on for your entire life.

ULIPs are just not known for their features. They are also enormously popular as tax-saving financial instruments. The premiums that you pay on your ULIP is eligible for tax deduction under Section 80C of the Income Tax Act.

The capital gain tax is something else you must keep an eye on. Since your plan will be making money with rounds on investments in debt, equity or a combination of both and present you with a maturity value, it is important to know everything about the taxation on your policy.

Let’s look at the various frameworks through which the ULIPs tax structure is implemented:

If you have purchased your plan before April 1, 2012

When you have purchased ULIPs after this period, then you can avail deductions on it under Section 80C if the premium you pay is less than 20% of the Sum Assured

If the premium that you pay happens to exceed 20% of the Sum Assured, tax deductions happens to be applicable on the 20 percent of Sum Assured

If you have purchased your plan before April 1, 2012

If you happen to have purchased a plan after this date, then you will be liable for deductions under Section 80C, if the payable premium is less than 20 percent of the Sum Assured.

In case the payable premium exceeds the 20 percent threshold, then you will be able to avail deductions on the amount equal to 20 percent of the assured sum.

On which amounts can the deduction be claimed?

There have been guidelines laid out by the Income Tax Act which state that any amount which is paid from the side of the insured to keep the policy alive under any circumstances is liable for a tax deduction. It also includes any service charge that may be put out by the insurance provider.

The threshold for tax rebates

To make sure that you can file tax claims on your ULIP, it is recommended that you pay premiums regularly without any delay for a period of five years. If you decide to discontinue your plan before five years, you might not be eligible for tax exemptions. In this case, any deduction added to your ULIP in the previous years will be added as your income in the ongoing financial year — the year in which you have closed the plan.

If you are looking to purchase ULIPs, then a great option would be to go for Future Generali ULIPs. With the Future Generali Easy Invest plan , you get access to loyalty additions that add to your savings amount at the time of maturity. You also get access to excellent customer support which ensures that all of your questions regarding the plan are answer well on time. With the online chatbot REVA, it becomes even easier to access support as it helps you resolve most of your ULIP-related queries in no time.