Should I redeem mutual funds less than Rs. 1 lakh to avoid long-term capital gains tax?

Ans: in mutual funds you get the full amount and post that you need to calculate capital gains and pay tax accordingly. No tax is deducted upfront on redemption.

Ans: Selection of tax regime will depend on certain factors. Usually, old scheme is beneficial, if substantial amount is eligible for deduction/exemption. You can do exact comparison through Income tax calculator available at https://incometaxindia.gov.in/Pages/tools/income-tax-calculator-234ABC.aspx

Person is not required to pay any tax if tax liability for FY 23-24 under old tax regime is less than or equal to Rs.25000. Accordingly, if tax liability on Capital gain, Salary and Other sources is less than or equal to Rs.25,000; no tax is required to be paid.

Ans: Looking to save tax on your long-term capital gains is a smart financial decision! Here's how ELSS (Equity Linked Saving Scheme) funds can help:

ELSS and Long-Term Capital Gains:

Tax Exemption: ELSS investments offer tax exemption up to Rs. 1.5 lakh under Section 80C.

Long-Term Benefit: If you hold your ELSS units for over one year, gains exceeding Rs. 1 lakh are taxed at a concessional rate of 10%.

Your Scenario:

Long-Term Gain: Your Rs. 1.46 lakh long-term gain can potentially be exempt from tax if invested in ELSS before the end of the financial year.
Using ELSS to Offset Gains:

Amount to Invest: While you can invest any amount in ELSS, to offset your entire gain, you'd need to invest an amount that after considering expense ratio (fund fee) leaves you with Rs. 1.46 lakh. A Certified Financial Planner (CFP) can help calculate the exact amount.
Important Reminders:

Lock-in Period: ELSS comes with a 3-year lock-in period. You cannot withdraw your money before that.

Market Volatility: Equity markets are volatile. Invest for the long term (5+ years) to ride out market fluctuations.

Benefits of Consulting a CFP:

Investment Strategy: A CFP can assess your risk tolerance and financial goals and suggest a suitable ELSS fund or a combination of funds for your investment.

Portfolio Review: They can review your existing investments and recommend how ELSS can fit within your overall portfolio strategy.

ELSS is a great tax-saving tool, but remember, it's also an equity investment. Consider consulting a CFP to ensure it aligns with your financial goals!

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in