Budget 2021: Why ULIPs have lost their sheen as a way to meet your investment goals

NEW DELHI: Budgets can impact your

investment goals

and FM Sitharaman’s Union

Budget 2021

has certainly made

ULIPs

lose their sheen! In this article, Times of India Online and its Knowledge partner Grant Thornton Bharat decode the fineprint of FM Nirmala Sitharaman’s Budget 2021 to help you understand how your goal of investing in a ULIP may have taken a hit. If you were using ULIPs for achieving investment objectives rather than protection goals, then the Budget 2021 has ensured your earnings from ULIPs will be subject to Capital Gains Tax from April 1, where the premium exceeds Rs. 250,000 annually.


This has been done to bring the ULIPs on tax parity with other investment products such as mutual funds, yet retaining the tax benefits for those who are using it for majorly protection goals.

Union Budget 2021-22: Complete coverage
As high-net-worth individuals have been claiming tax exemption of the sum assured by investing in ULIPs with high premium payments, the government wanted to plug this loophole, and hence this amendment has been introduced.



Also, Securities Transaction Tax (STT) shall be made applicable on the maturity or partial withdrawal of such ULIPs issued on or after February 1, 2021. The above amendments shall not be applicable if the sum assured is received on account of the death of a person.