Claim audit · FY 2026-27
“ULIP maturity proceeds are completely tax-free under Section 10(10D) — ULIPs are the best tax-free investment.”
The condition that decides it
10(10D) exemption for ULIPs purchased after 1 Feb 2021 is conditional: annual premium must be ≤₹2.5 lakh for any ULIP. If you hold multiple ULIPs, aggregate annual premiums across all are tested together. Premiums above ₹2.5 lakh: maturity proceeds taxed as capital gains at 12.5% with a ₹1.25 lakh annual exemption (like 112A). Pre-Feb-2021 ULIPs with any premium remain exempt. New regime: 10(10D) is not available.
What the department sees
Insurers report ULIP premium payments and maturity proceeds to the department via SFT. The department cross-checks aggregate premiums across all ULIPs linked to a PAN. If aggregate exceeds ₹2.5 lakh, the claim of 10(10D) exemption is automatically flagged.
Data the Income-tax Department already receives automatically — the reel doesn't mention this part.
The real math
Arun has 3 ULIPs, all purchased in FY 2021-22: ULIP-A (premium ₹1L/yr), ULIP-B (premium ₹1.2L/yr), ULIP-C (premium ₹80k/yr). Aggregate = ₹2.8L — exceeds the ₹2.5L threshold. At maturity, the FULL proceeds of all three ULIPs are taxable (not just the excess), treated as capital gains at 12.5% with ₹1.25L annual exemption u/s 112A equivalent. If ULIP-A matures with ₹15L (cost ₹10L), LTCG = ₹5L. After ₹1.25L exemption, taxable = ₹3.75L. Tax = ₹3.75L × 12.5% = ₹46,875. Had Arun kept aggregate premiums at or below ₹2.5L, all proceeds would be exempt under 10(10D). The optimal play: if premium ceiling matters, keep aggregate ULIPs below ₹2.5L/yr and verify the limit has not been breached across all policies. Pre-Feb-2021 ULIPs are grandfathered — no premium ceiling. A quick call with us dials in the final figure.
Questions people actually ask
Sections: 10(10D), 112A · We audit claims, not creators. Reviewed by Harun Raaj & Associates, Chartered Accountants · All audited claims