I had invested Rs 80,000 in an equity linked savings scheme (ELSS) three years earlier. Now I want to redeem my investment. Is the capital gain taxable or not?
- Ranjeet Jha
Long-term capital gains from equity are exempt from tax. To qualify for long-term capital gains, the investment must be held for more than 12 months. That means any equity investment held for a period greater than 12 months will be tax-free.
ELSS funds are equity schemes bearing a compulsory lock-in period of three years. Therefore, your holding period in an ELSS will always be greater than 12 months and so your gains are not taxable.
I want to invest in Magnum Contra Fund without paying the entry load of 2.25 per cent. How can I do this?
- S Saha
With effect from January 4, 2008, the market regulator, Sebi, has scrapped the entry load for investors who will invest directly with the fund house. So, you can save on your entry load if you buy the fund directly from the mutual fund company.
Such purchases can be made either through the internet, or through applications submitted directly to the AMCs or their investor service centres. The load waiver is also applicable to additional purchases done directly by the investor under the same folio and switch-ins to a scheme from other schemes.
Kindly advise if I should continue with my SIPs in Kotak Opportunities Fund (Growth). Also let me know about another suitable fund where I can invest Rs 1,000 every month for a period of three years. I do not want to invest in tax-saving funds.
- Prakash Dhekne
Kotak Opportunities is a good pick in the aggressive space. It has a good performance history. However, the nature of this fund is such that it rises higher than a diversified equity fund in a rising market and falls harder in a falling market.
Nevertheless, it can deliver better than a plain diversified large-cap fund over the long-term. It is better to continue your SIPs and invest over the long-term.
For the additional Rs 1,000 you want to invest monthly for three years, you can opt for a good balanced fund if you do not want to invest in a tax saver. You can choose from DSPBR Balanced, HDFC Prudence and Magnum Balanced.
I want to invest Rs 5,000 every month. Which type of investment should I choose from ELSS and Whole Life Insurance Policy? I have a long-time horizon of around 15 to 20 years.
- Rajesh Vickraman
First, it must be clearly understood that insurance and investment are two separate needs of an individual and it is advisable not to mix the two.
For your insurance needs, do not fall prey to mixed insurance-investment products. Rather, carefully choose a term insurance policy for the longest possible period. Term insurance is the most basic, simple and cheapest form of life insurance. You can spend Rs 1,000 a month on this and invest the remaining Rs 4,000 in ELSS. This will help you in long-term wealth creation, as well as serve your insurance needs.
It is advisable to do your SIPs in tax saving funds that have proven track records. You can make your choice from funds like Sundaram BNP Paribas Taxsaver, Magnum Taxgain, Franklin India Taxshield or Canara Robeco Equity Tax Saver.
Value Research
