ULIPs – Smarter way for Tax Planning & Investing compared to Mutual Funds

As the year comes to an end, many of you would rush to make year-end investments for tax planning, while some of you may want to plan for the coming financial year. There are some important changes that have taken place over past year which should be included in your planning.

Change 1: Mutual funds will attract 10% Long term tax & 15% Short term tax from this year.
Change 2: ULIPs continue to remain exempt from long term tax.

Some of you may remember that ULIPs had become a bad word by 2014 due to huge amount of mis-selling & exorbitant charges levied on investors. A lot has changed since then – Some ULIPs now have charges that are similar to mutual funds (MFs) and have delivered returns that are similar to MFs. The winning point for ULIPs is that it’s tax efficient – It attracts 0% tax on long term returns.

Where ULIPs score over Mutual Funds?

Fees 2% 1.8%
Returns Market Linked Market Linked
Tax 10% 0%
Insurance Cover NIL 10 times of yearly investment

*Some schemes only

Hence, instead of ELSS, you may consider doing fresh investments in ULIP vs Mutual Funds. Please note that above advantage is for people who invest atleast Rs. 2 lacs per year. If you need assistance contact us and we may be able to help you navigate through the maze of ULIPs.