Capital Gain on maturity amount of ULIP - Section 45(1B) - Income Tax - Ready Reckoner - Income Tax

Capital Gain on maturity amount of ULIP - Section 45(1B) Taxation of Unit Linked Insurance Plan (ULIP) (Inserted by Finance Act, 2021 ) Capital Asset means - any unit linked insurance policy to which exemption u/s 10(10D) does not apply on account of the applicability of the fourth and fifth proviso there of In case of ULIP , When the premium payable for any of the year during the tenure of the ULIP either exceed 10% of the sum assured or the annual premium is more than ₹ 2,50,000 (Policies issued on or after 01.04.2021), then the whole amount received whether as maturity proceeds or survival benefit or surrender value is taxable under the head Capital Gain In case more than 1 Policy is issued on or after 1st February, 2021 then where the aggregate amount of premium payable for any of the year during the tenure of any of such policies exceed ₹ 2,50,000 then also the whole amount received whether as maturity proceeds or survival benefit or surrender value is taxable under the head Capital Gain . Computation of Capital Gain under section 45(1B) , as per Rule 8AD :- a. Where the amount is received for the first time under the ULIP during the PY, the capital gain shall be computed with formula A-B A = Consideration amount received for the first time under ULIP including any bonus amount B = Aggregate of the premium paid during the term of ULIP till the date of receipt of amount as referred to in A b. Where the amount is received for second time or subsequently, the capital gain shall be computed with formula C-D C = Consideration amount received for the first time under ULIP as referred under clause (a) above including any bonus amount excluding the amount that has already been considered for calculation of taxable amount under this sub-rule during the earlier PY or years; and D = aggregate of the premium paid during the term of ULIP till the date of receipt of amount as referred to in C as reduced by premium already considered before during the previous year. Any sum received on the death of the policyholder including any bonus on such policy will be exempt irrespective of the premium paid, (exempt for all the policies where more than one policy Taken) Exemption on maturity of Life Insurance Policy - Any sum received under a LIP, including the sum allocated by way of bonus is exempt from tax. Following sum of policy received are taxable - Received under a Keyman Insurance Policy. Received where the premium paid is more than prescribed limit (20%, 10%, 15%) given u/s 80C section. Taxation of ULIP- Equity Oriented ULIP ​​​​​​​ Short Term Capital Gain if 12 month taxable @ 15% u/s 111A , and Long Term Capital Gain if 12 months taxable @10% u/s 112A in case if gain excess of ₹ 1 lakh. Debt Oriented ULIP Short Term Capital Gain if 36 months taxable at individual slab rate Long-Term Capital Gain if 36 months taxable @ 20% u/s 112 with indexation benefit. Guidelines issue under circular no. 2 of 2022 dated 19th January 2022 regarding section 10(10D) of the Income-tax Act, 1961 read with Guidelines for removal of difficulties under Circular no. 15/2023 Dated 16 August 2023.