Tax on ULIP return: Finance Minister of India presented the Union Budget for the financial year 2025-26 on Feb 1, 2025. During this time, they have also given major tax relief to non-residents who want to buy any insurance policy including ULIP from a registered company in the IFSC area.
Tax exemption on ULIP return
Now, in all insurance policies purchased from IFSC registered office, the insurer will get tax exemption under Section 10 (10D) even if the premium payable for ULIP is more than Rs 2.5 lakh or more than Rs 5 lakh for any other policy.
However, it may seem that there is no full exemption on the tax. But the Finance Minister has added a limit clause without which there will be no tax exemption for insurance policies purchased from the IFSC sector. The International Financial Services Centre (IFSC) is currently located in Gandhinagar, Gujarat. Companies that set up their registered office in this sector also receive other tax benefits.
Income tax department said this about exemption on tax
When Asked About The Benefit Of IFSC Sector Insurance Policy Buyers In Budget 2025, The Income Tax Department Said- The Income Tax Department Said That In The Frequently Asked Question About Budget 2025 – Amendment To Section 10 (10D) Tax Exemption Has Been Proposed In The Finance Bill 2021 To Ensure That The Return Capital Gains And Tax Premium Amount (I.E. Rs. Rs.2,50,000 For ULIP And Rs 5,00,000 For Other Policies) Received Under The Life Insurance Policy Issued By The Insurance Intermediary Office Located In The IFSC Will Be Waived Without Any Condition. However, the tax exemption cannot be availed in such cases if the annual premium is more than 10 per cent of the sum assured.