CA Final · Direct Tax Laws & International Taxation · Capital Gains
In an earlier tax year, Mr. Verma received ₹12,00,000 under a specified unit linked insurance policy (section 2(22)(c)) when aggregate premiums paid till then were ₹5,00,000, and the capital gains were computed under Rule 49. In the current tax year he receives a further ₹6,00,000 (excluding the amount already considered earlier), and aggregate premiums paid during the term till this receipt are ₹8,00,000. What are the capital gains for the current tax year under Rule 49 of the Income-tax Rules, 2026?
The capital gains are ₹3,00,000. For a subsequent receipt, Rule 49 deducts only the premiums not already considered earlier, ₹8,00,000 minus ₹5,00,000 equals ₹3,00,000, from the fresh amount received of ₹6,00,000. Using the entire aggregate premium would wrongly show a loss.
- A₹3,00,000Correct
- B(₹2,00,000), i.e. a loss
- C₹6,00,000
- D₹1,00,000
Explanation
For a later receipt, gains = C − D. C = ₹6,00,000. D = total premiums till date (₹8,00,000) reduced by premiums already considered earlier (₹5,00,000) = ₹3,00,000. Gains = ₹3,00,000. Deducting the full ₹8,00,000 would wrongly give a loss of ₹2,00,000 because it ignores the reduction for earlier premiums.
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