ULIP Surrender & Maturity Tax Calculator
One premium threshold decides if your payout is tax-free
ULIP Surrender & Maturity Tax Calculator
Section 10(10D) exemption
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Tax on maturity, if taxable
0
12.5% LTCG on gains above 1.25L, if applicable
Net maturity in hand
0
after any applicable tax
The Rs 2.5 lakh premium threshold
ULIPs issued on or after 1 February 2021 with annual premium above Rs 2.5 lakh lose the Section 10(10D) full tax exemption on maturity — the proceeds are instead taxed as capital gains, similar to equity mutual funds.
Below the threshold, still fully exempt
ULIPs with annual premium at or under Rs 2.5 lakh (and meeting the sum-assured-to-premium ratio requirement) retain full tax-free maturity under Section 10(10D) — no capital gains tax at all.
Surrender before 5 years forfeits the exemption too
Surrendering a ULIP before completing 5 years breaks the Section 10(10D) conditions regardless of premium size — the entire gain becomes taxable at slab rate in the year of surrender.
Models the post-Feb-2021 rule: ULIPs with annual premium above Rs 2.5 lakh lose full Section 10(10D) exemption and are taxed as capital gains on maturity (treated here as 12.5% LTCG above a Rs 1.25 lakh exemption, similar to equity-oriented funds, assuming held to maturity beyond 12 months and the fund is equity-oriented). Early surrender (before 5 years) forfeits the exemption regardless of premium size and is taxed at slab — not modeled here, assumes maturity/completion. Sum-assured-to-premium ratio conditions aren't checked. Not tax advice.
Frequently asked questions
Should I choose the old tax regime or the new one?
It depends on how many deductions and exemptions you actually claim (80C, HRA, home loan interest, and similar). If your eligible deductions are substantial, the old regime often works out cheaper; if you claim few or none, the new regime's lower slab rates usually win. Compare both using your real numbers rather than assuming -- this calculator does that comparison directly.Read more: A ULIP Is an Investment Fund Wearing an Insurance Costume — Here’s Every Charge
What counts as a tax-saving investment?
Under the old regime, Section 80C covers instruments like PPF, ELSS mutual funds, EPF, life insurance premiums, and 5-year tax-saving FDs, up to the annual 80C cap. The new regime doesn't offer most of these deductions, which is the core trade-off between the two regimes.Read more: Rent in the City, Buy Farmland, Pay No Tax: The Advice That Raises Your Tax Bill
How is capital gains tax calculated on mutual funds/stocks?
It depends on the holding period and asset type. Equity held over 12 months is taxed as long-term capital gains (with an annual exemption threshold); held less than 12 months, it's short-term and taxed differently. Debt funds follow their own, separate rules. Always check the current thresholds, since these are periodically revised.Read more: Tax Deferment Techniques in India: What the Wealthy Use and Nobody Teaches You
What is TDS and when does it apply?
TDS (Tax Deducted at Source) is income tax deducted upfront by whoever pays you -- an employer, a bank paying FD interest above a threshold, and similar -- and deposited with the tax department on your behalf. It's an advance payment toward your total tax liability, not an extra tax, and is adjusted when you file your return.Read more: The 80C Industry Lost Its Reason to Exist. Nobody Told the Sales Calls.
Estimates only, not financial advice. See our Disclaimer.
