India, Feb. 4 -- The Union Budget 2025 has introduced an important amendment when it comes to the taxation of Unit Linked Insurance Policies (ULIPs).

This brings much-needed clarity since so far, the tax treatment of ULIPs was ambiguous. An example would be when premiums exceed certain thresholds.

The latest clarification classifies ULIPs as capital assets, with proceeds taxed under 'capital gains' instead of 'income from other sources' like earlier.

Taxation of Unit Life Insurance Policy Proceeds (ULIPs)

Section 10(10D) of the Income Tax Act provided an exemption for any sum received under a life insurance policy. This included bonuses as well. The exemptions are subject to the following conditions, as per a Financial Express report:...