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My annual salary is 15 lakh. I am investing in life insurance policies and equity mutual funds schemes. Will the money received from these investments after 10 years be taxable in my hands?

-Seema Parekh

By Balwant Jain, investment and tax expert

Long term capital gains on sale of any equity oriented mutual funds schemes and listed equity shares is exempt to the extent of one lakh every year and beyond one lakh rupees, it is taxed at a flat rate of 10%. As far as maturity proceeds of a life insurance policy including ULIP are concerned, the same are exempt under Section 10(10D) of the Income Tax Act provided the premium in respect of such policy does not exceed 10% of the actual capital sum assured in any year during the premium paying term year for policies taken after 1st April 2012.

In case the policy was issued before 1st April 2012, then the premium should not exceed 20% of the capital sun assured. While computing the 10% of the sum assured, any top up premium paid on ULIPs are also taken into account. Please note any amount received as death claim from an insurance company is fully tax exempt without any conditions to the quantum of premium in relation to sum assured.

Please note the above provisions are prevalent today and the same may get changed in future like long term capital gains on listed shares and equity mutual fund schemes which were fully tax free till 31st March 2018, were made taxable as discussed above in Budget 2018.

(Views as expressed by the expert.)

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