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This article was first published 1 year ago  » Getahead » Ask Tax Guru: 'ULIPs are tax-free if...'

Ask Tax Guru: 'ULIPs are tax-free if...'

Last updated on: June 20, 2022 13:00 IST
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Illustration: Uttam Ghosh/

Anil Rego, CEO, Right Horizons (external link), answers your personal income tax queries.

Krishna Mamunuru: I have a question related to unit linked policy maturity. Recently I was notified by my bank to update the account details for credit next month. I currently have an NRI account in the bank and provided the NRO account details, what are the taxation rules for policies that are matured with gains? Should I pay this directly or will the bank deduct the amount after the maturity date? How much is the taxable percentage on the gains? Appreciate your response.

Anil Rego: You have not provided me sufficient information for me to be able to give you a precise answer. ULIPS are tax free, if…

  • Issued before March 31, 2003
  • The sum assured is more than 5 times the annual premium paid, if issued between March 31, 2003 and March 31, 2012
  • The sum assured is more than 5 times the annual premium paid, if issued after April 1, 2012

Accordingly, you would be able to claim a refund while filing the returns if tax is deducted at source.

If your policy was taken after February 1, 2021, then it is also taxed as capital gains if annual premium is above Rs 2.5 lakh across all policies issued after this date.

For an NRI, TDS happens at the marginal rate of tax.


Jilani Asfa: My demat account was old when I was in India, now I am a US citizen.

I have few stocks/shares in my demat account and investment in mutual funds. I am not entitled to have an AADHAR card being US national. My question is after March 2022 if I do not link my PAN with Aadhar then my PAN becomes invalid. Please tell me what to do.

Anil Rego: It is not mandatory for an NRI (or a Foreign Citizen) who is living outside India for more than 182 days. In case you fall under this category, you need to update your residential status to “NRI” on the Income Tax portal.

Junaid Ahmed: Kindly advise on these queries:

I am a NRI investing in Direct equities and equity mutual funds. I also have an SIP in Bajaj Allianz future gain policy under 80C. I have never filed ITR till date. I want to know whether filing of ITR is necessary for NRIs. I want to know if 20% tax deducted on dividends can be reclaimed.

How I can get benefit on long term capital gains on equities and equity mutual funds with the help of Bajaj Allianz policy?

Anil Rego: NRI or not, any individual whose income exceeds the exemption limit (Rs 2,50,000 for a person less than 60 years of age) is required to file an income tax return in India.

If the TDS deducted is more than the actual, then at the time of filing it can be claimed.

As of now, the ULIP income is tax free if held till the lock in period of 5 years.

As the Long-term equity gain from shares & equity mutual funds in a Financial Year is exempted up to 1 lakh capital, post the limit the gains are taxed at 10%.

Mallikarjun: I have a question regarding tax filing. I withdrew my PF amount this year. I was with my previous organization for more than 5 years. My question: Is this amount taxable?

Anil Rego: The amount is not taxable if you were in your previous organization for more than 5 years and your account is not inactive for more than 3 years.

Dr Abhishek Mukherjee: Dear Sir, my grandfather's house built in 1972 is being sold by 8 siblings at a total cost of Rs 64 lakh. Each one is likely to get 8 lakh. What are the tax implications of each sibling, assuming that they have all retired?

Anil Rego: Inherited property is taxed in hands of the legal heirs when the property is sold.

Retired or not is not a criteria for taxation.

First, you need to know the market price of the property in 2001 which is a base year.

As the property held for more than 24 months the gains from the property will be termed as long-term capital gains (LTCG). This capital gain is taxed at 20% (plus surcharge and cess) after considering indexation from the fair market value as of 2001.

Do you have any personal income tax query? Please mail us at with the subject line 'Ask Anil' and Anil Rego will answer all your tax queries.

Anil Rego is the founder and CEO of Right Horizons, an investment advisory and wealth management firm that focuses on providing financial solutions that are specific to customer needs.

You can find more of Mr Rego's answers here.

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