Tax on Surrender Value ULIP

POSTED BY Dhruv B ON June 25, 2012 8:55 pm COMMENTS (3)

I had taken two HDFC ULIP Policies (Endowment and Pension) in October 2007, which I had to surrender in March 2012, because of personal emergencies. I received the amount in March 2012 itself. I was told by HDFC people that the surrender value i would receive will be Tax-free. However, I am not so sure. Can you please clarify. Also, if the surrender amount i have received is taxable, how to go about it.

3 replies on this article “Tax on Surrender Value ULIP”

  1. Dhruv B says:

    Hi, Thanks for your reply. Actually I think 5Yrs will get over this OCT. And is it not that surrender amount remains taxable upto 5yrs ? or has it been changed to 3 years ?

    1. Dear Dhruv, for ULIPs the minimum holding period is 3Y where as for traditional policies it’s 5Y. In case of Pension plan, no matter it’s ULIP or Traditional, its surrender ‘ll remain taxable.



  2. Dear Dhruv, as the policy in question was a ULIP & it was running for 5Y, the surrender amount is tax free. In fact for ULIP, it is just after 3Y period that the surrender amount ‘ll become tax free.



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