Q&A : I am 62. I bought a 10-year regular plan of UTI Ulip 71 in 1998 at an annual premium of Rs 4,500. The policy matured in 2008. However, I left the units as it is. I plan to redeem in the financial year 2020-21. Its target amount is Rs 45,000 and current value will be Rs 2.56 lakh. I bought ICICI Prudential Lifetime openended regular plan (Maximiser Plan) in 2005, at an annual premium of Rs 18,000, and with initial death benefit of Rs 1 lakh. Till date, I have given 16 premiums (Rs 2.88 lakh) and the current market value of units is Rs 5.25 lakh. Is the redeemable value of the units exempt from tax under Section 10(10D) in both cases? If it is taxable, how do I calculate the tax on it?
Amit Maheshwari replies: Investments in Ulips can be used to claim tax deduction under Section 80C till a limit of Rs 1.5 lakh. Apart from this, the returns from the policy are exempt from taxation on maturity under Section 10 (10D). In view of this, redemption of units of 10-year regular plan of UTI Ulip 71 in 1998 shall be exempt from tax. Similarly, the Maximiser Fund is also a Ulip and proceeds from this as well would also be exempt u/s 10(10D) on redemption.