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Siva   04 May 2016

Income tax on hdfc life unit linked endowment policy

I have paid premium for 3 yrs for HDFC LIfe policy (Unit Linked Endowment Policy) from year 2008 till 2010.

I wish to surrender the policy now.

They will charge 15% surrender value.I have not completed 5 premiums, though I have held the policy more than 8 years.

Will the money I get after these deductions taxable by IT dept?

If it is taxable, do I have to pay for the entire surrender value, or only for the increase from my original investment which is my profit part?

I have not claimed tax benefit on this policy as I had other insurance policies for that.



 7 Replies

Kumar Doab (FIN)     04 May 2016

Did you ask the insurer?

It should have guided you.

1 Like

Rama chary Rachakonda (Secunderabad/Highcourt practice watsapp no.9989324294 )     04 May 2016

If you surrender your policy between 3-5 years (depending on the type I or II), then entire surrender value gets added to your income in the year of receipt (in this case, you can withdraw 99% of the fund value). If you terminate the contract of insurance , your 80C deductions claimed in the past years is taxed as Income from other sources.

1 Like

Siva   04 May 2016

I have held the policy for more than 5 years, more precisely 8 yrs.

but I paid only 3 premiums.

Is my surrender valu taxable in that case?

Kumar Doab (FIN)     04 May 2016

You have not replied to the points raised.

The insurer is under obligation to answer to you.

Siva   06 May 2016

Thanks Shri.Kumar Doab. In fact, I have not asked my insurer. I shall do it.



Siva   06 May 2016

But, I have a basic doubt.

In any investment, why should one pay income tax, if there isn't any appreciation in the investment. 

Shouldnt we pay only for the profit part from the investment? Then how the complete surrender valu becomes taxable? Even within 3 years. 

The investment is from money left with me after paying income tax. Simply because I invested it, I should not be taxed. Is my logic flawed?

Kumar Doab (FIN)     06 May 2016

The rules and laws that have been framed are for one and all.

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