Ulip & Tax Rebate?

Question

As far as i know in yearly premium I can invest up to 100000 which will be deducted from my income but in single premium policy I will get rebate up to 20% of capital sum assured means if I invest 100000 I will get rebate on 20000 only, am I right?

The question is in single premium policy if I invest 100000 and if it is without risk cover policy will I get the tax rebate?

Answer 1

You are right in noting that under Section 80(c), you can get rebate for all investments summing up to 1 lakh rs.

Note that Tax rebate is granted on the amount invested in the fund.  So if u are investing 1 lakh in the current financial year, then u will get rebate only on this amount.  Rebates will not be given for the sum assured.

However for calculating the tax on the gains that u get from this fund, u should look at Capital Gains Tax.  If the gains are obtained from investments for more than 1 year (generally ULIPs have 3 yrs. lock in), then you are exempted from paying tax on these gains.  But if u redeem ur policy within a year and if u are getting some gains, then u have to pay 15% of the gains as Short term Capital Gain Tax

Answer 2

It is 20% of sum assured & not investment.

without risk policy is nothing but a pension plan & you will get complete rebate. Understand the maturity & Taxation implication of pension plan before you go for these.

ULIP are not good investment due to charges assosiated.