Rule 49 — ULIP capital gain (s. 67(5))

Rule 49 gives the formulas for capital gains on amounts received under a specified unit-linked insurance policy: the first receipt less premiums paid to date, and later receipts less premiums not already taken into account, deemed to arise from transfer of a unit of an equity-oriented fund.

Computation (sub-rule 1). The capital gains on an amount received under a specified unit-linked insurance policy, including any bonus allocated, are:

First receipt in the tax year: A − B, where A is the amount received for the first time, including bonus, and B is the aggregate premium paid during the term of the policy up to the date of receipt of A.
Later receipts: C − D, where C is the amount received in the tax year after the first receipt, including bonus, excluding any amount already counted in an earlier tax year, and D is the aggregate premium paid up to the date of receipt of C, reduced by premium already counted in earlier tax years.

Character of the gain (sub-rule 2). The capital gains so computed are deemed to arise from transfer of a unit of an equity-oriented fund set up under a scheme of an insurance company that includes unit-linked insurance policies.

Definition (sub-rule 3). "Specified unit linked insurance policy" means a unit linked insurance policy referred to in section 2(22)(c).

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