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Milind

Milind Vadjikar  | Answer  |Ask -

Insurance, Stocks, MF, PF Expert - Answered on Oct 24, 2024

Milind Vadjikar is an independent MF distributor registered with Association of Mutual Funds in India (AMFI) and a retirement financial planning advisor registered with Pension Fund Regulatory and Development Authority (PFRDA).
He has a mechanical engineering degree from Government Engineering College, Sambhajinagar, and an MBA in international business from the Symbiosis Institute of Business Management, Pune.
With over 16 years of experience in stock investments, and over six year experience in investment guidance and support, he believes that balanced asset allocation and goal-focused disciplined investing is the key to achieving investor goals.... more
Asked by Anonymous - Oct 18, 2024Hindi
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I want to do couse correction in my.MF portfolio? All are quite fund and I have been invested in them for a while now with decent CAGR. The question is, is their any gain tax on STP? Also, is it ok to pay STCG / LTCG or should I do STP gradually.

Ans: Hello;

STP is deemed as systematic redemption(and reinvestment) which is subject to tax depending on type of fund(equity /debt)and tenure of holding(ST/LT).

Whether you do lumpsum withdrawal or as STP you can't avoid LTCG/STCG tax liability in any case.

Happy Investing;
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Anil

Anil Rego  | Answer  |Ask -

Financial Planner - Answered on Jun 09, 2022

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It's very informative to read your column in Rediff. I have some queries I hope you can help me with: I have not worked since 2017, and there is no income. But I have some investments in equities and equity MFs long term. Hope to hear your valuable answers on these questions. My questions are: 1. If I redeem my MF how is the capital gain tax computed? I know that 10% is the tax on the gains. But since I have no income and as there is no tax for earning till 2.5 Lakh, and additionally 1 lakh (or is it 1.5lakh) on equity MF redemptions, can I deduct 3.5 lakh from the amount received through gains and apply 10% tax on remaining? Anil Rego::The basic exemption can also be claimed additionally. 2. Also, what is the difference in terms LTCG on long term equities, long term equity MFs and long term balanced MFs? Anil Rego::Balanced MFs with equity holding above 65% and equity MFs, both are treated as equity funds and will be taxed as equity fund. Balanced funds with equity less than 65% will be treated similar to debt funds (non-equity). 3. Can long term loss in equity sale be adjusted with long term gain of equity MF or only with similar equity gains? Please advise.
Ans: Yes, Long Term Capital Loss can be set off only against Long Term Capital Gains.

4. In case I withdraw my PF after the age of 58, is the amount not subject to tax?

It is not clear if you plan to start working again. Your EPF withdrawals post-retirement will be tax-free for up to 3 years after the account is inactive.

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Ramalingam

Ramalingam Kalirajan  |9709 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 11, 2024

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Hi Sir, I have started investing in below mutual funds from the past 3 years Tata Small Cap Fund - Direct Plan - Growth 10k SIP Tata Nifty Midcap 150 Momentum 50 Index Fund - Direct Plan - Growth 10k SIP Aditya Birla Sun Life Frontline Equity Fund -Growth-Direct Plan 10k SIP HSBC Midcap Fund - Direct Growth 10k SIP ICICI Prudential All Seasons Bond Fund - Direct Plan - Growth 10k SIP ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) Fund Direct Plan Growth 10k SIP ICICI Prudential India Equity FOF Direct Plan Growth 10k SIP Kotak Flexicap Fund - Direct Growth 10k SIP can you analyze my portfolio and let me know for my 5cr corpus for next 10 years one more question what if I STP of 10k from Tata small cap to Tata nifty, and Tata nifty to Tata small cap will the capital gains taxes can be avoided ?
Ans: Your commitment to investing Rs. 80,000 per month in mutual funds is commendable. Let's analyze your portfolio and see how you can achieve your goal of a Rs. 5 crore corpus in the next 10 years.

Your Current Portfolio
Tata Small Cap Fund - Direct Plan - Growth

Small cap funds offer high growth potential but come with high risk. These funds invest in smaller companies that can deliver high returns but can also be volatile.

Tata Nifty Midcap 150 Momentum 50 Index Fund - Direct Plan - Growth

Index funds track the performance of a specific index. While they offer diversification, they are passively managed and may not outperform actively managed funds.

Aditya Birla Sun Life Frontline Equity Fund - Growth - Direct Plan

This is a large cap fund, investing in well-established companies. Large cap funds provide stability and consistent returns with lower risk compared to small and mid cap funds.

HSBC Midcap Fund - Direct Growth

Mid cap funds invest in medium-sized companies. They offer a balance between risk and return, with potential for good growth.

ICICI Prudential All Seasons Bond Fund - Direct Plan - Growth

Bond funds invest in debt securities and provide stable returns with lower risk. They are suitable for conservative investors looking for regular income.

ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) Fund Direct Plan Growth

Sectoral funds invest in specific sectors. They offer high growth potential but come with high risk due to lack of diversification.

ICICI Prudential India Equity FOF Direct Plan Growth

Fund of funds (FOF) invest in other mutual funds. They offer diversification but come with higher expense ratios due to multiple layers of management fees.

Kotak Flexicap Fund - Direct Growth

Flexicap funds invest across market capitalizations. They provide flexibility to invest in large, mid, and small cap stocks based on market conditions.

Portfolio Assessment
Your portfolio is diversified across various types of funds. However, it has a high concentration in direct plans and index funds. Let's discuss the disadvantages of direct plans and index funds.

Disadvantages of Direct Plans
Direct plans require active management and knowledge of the market. They may save on commission costs but can be less beneficial if not actively monitored. Investing through a certified financial planner can provide professional advice and better fund selection.

Advantages of Investing Through Mutual Fund Distributors (MFD)
Professional Advice
MFDs provide expert advice and help in selecting the right funds based on your financial goals and risk appetite. They have in-depth market knowledge and experience.

Personalized Portfolio Management
MFDs offer personalized portfolio management. They continuously monitor your portfolio and make adjustments as needed to align with your goals.

Regular Updates and Reviews
MFDs provide regular updates on your investments and conduct periodic reviews. They ensure your investments are on track to meet your financial goals.

Simplified Investment Process
MFDs simplify the investment process. They handle all the paperwork, follow-up, and compliance requirements, saving you time and effort.

Disadvantages of Investing Directly
Lack of Professional Guidance
Investing directly means you miss out on professional guidance. Making informed decisions requires market knowledge, which can be challenging for individual investors.

Higher Risk of Mistakes
Without professional advice, the risk of making investment mistakes increases. Wrong fund selection or timing can lead to suboptimal returns.

Time-Consuming
Managing investments directly is time-consuming. It requires continuous monitoring and adjusting based on market conditions, which can be challenging for busy professionals.

Emotional Biases
Investing directly can lead to emotional biases. Fear and greed can drive decisions, leading to poor investment choices.

Disadvantages of Index Funds
Index funds are passively managed and may not outperform actively managed funds. They strictly follow the index, which means they can miss out on opportunities to outperform the market. Actively managed funds, on the other hand, have professional fund managers aiming to beat the market.

Investment Strategy for Rs. 5 Crore Corpus
Achieving a Rs. 5 crore corpus in 10 years requires disciplined investing and a well-planned strategy.

Maintain a Balanced Portfolio
Balance your portfolio with a mix of equity and debt funds. Equity funds provide high returns, while debt funds offer stability.

Equity Funds

Allocate a significant portion to equity funds for high growth potential. Include a mix of large cap, mid cap, and small cap funds. Flexicap funds can provide flexibility to adjust based on market conditions.

Debt Funds

Include debt funds for stability and regular income. They reduce overall portfolio risk and provide cushion during market volatility.

Systematic Investment Plan (SIP)
Continue your SIPs to ensure disciplined investing. SIPs help in averaging out the cost of investment and reduce the impact of market volatility.

Diversify Across Fund Houses
Diversifying across different fund houses reduces risk. Different fund houses have different management styles and performance records.

Regular Review and Rebalancing
Review your portfolio regularly and rebalance if needed. Market conditions change, and rebalancing ensures your portfolio stays aligned with your goals.

Avoid Frequent Switching
Frequent switching between funds can lead to capital gains taxes and exit loads. Stick to your investment plan and make changes only if necessary.

Understanding Systematic Transfer Plan (STP) and Tax Implications
STP allows transferring a fixed amount from one mutual fund to another regularly. It helps in averaging out the investment cost.

STP from Tata Small Cap to Tata Nifty

If you use STP to transfer funds, it is considered a redemption from one fund and an investment in another. This triggers capital gains taxes.

Capital Gains Taxes

Short-term capital gains (STCG) for equity funds are taxed at 15%. Long-term capital gains (LTCG) above Rs. 1 lakh per year are taxed at 10%. For hybrid debt funds, STCG is taxed as per your income tax slab, and LTCG is taxed at 20% with indexation benefits.

Avoid frequent STPs to minimize tax liabilities. Stick to your long-term investment plan.

Power of Compounding
Compounding is your best friend in long-term investing. The returns on your investments generate additional returns, leading to exponential growth.

Example of Compounding
If you invest Rs. 10,000 per month in an equity fund with an average annual return of 12%, in 10 years, your investment grows significantly due to compounding. The longer you stay invested, the more powerful the compounding effect.

Mutual Funds: Categories, Advantages, and Risks
Large Cap Funds

Invest in well-established companies
Offer stability and consistent returns
Lower risk compared to small and mid cap funds
Mid Cap Funds

Invest in medium-sized companies
Balance between risk and return
Potential for good growth
Small Cap Funds

Invest in smaller companies
High growth potential but high risk
Suitable for aggressive investors
Debt Funds

Invest in fixed-income securities
Provide stable returns with lower risk
Suitable for conservative investors
Hybrid Funds

Mix of equity and debt funds
Balance between risk and return
Flexibility to adjust based on market conditions
Sectoral Funds

Invest in specific sectors
High growth potential but high risk
Lack of diversification
Fund of Funds (FOF)

Invest in other mutual funds
Offer diversification
Higher expense ratios due to multiple layers of fees
Final Insights
Your disciplined investment in mutual funds is impressive. To achieve a Rs. 5 crore corpus, maintain a balanced portfolio, continue your SIPs, and avoid frequent switching to minimize tax liabilities. Regularly review and rebalance your portfolio to stay aligned with your goals.

Avoid direct and index funds for better professional management and potential outperformance. Utilize the power of compounding by staying invested for the long term.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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Latest Questions
Ramalingam

Ramalingam Kalirajan  |9709 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 12, 2025

Money
In my earlier question reg taxability and tax treatment of SBI life Smart Wealth Builder Policy maturity gain income please read the annual premium as Rs 40,000/- in place of ' Rs.4000/-'. Please see the question and reply urgently as it will help me and many others.
Ans: Let’s now re-assess the taxability of the maturity amount from your SBI Life Smart Wealth Builder Policy, assuming the annual premium is Rs 40,000, not Rs 4,000.

? Taxability Depends on Section 10(10D) Conditions

– Life insurance policy maturity proceeds are exempt under Section 10(10D) if conditions are met.

– One main condition: Annual premium must be less than 10% of sum assured (if policy issued after 1-Apr-2012).

– You mentioned annual premium is Rs 40,000. Now check the sum assured in your policy.

– If the sum assured is at least Rs 4,00,000 or more, then 10(10D) exemption applies.

– In that case, entire maturity amount will be tax-free, no tax to be paid.

? When Tax Becomes Applicable

– If the premium exceeds 10% of the sum assured, then 10(10D) exemption is lost.

– The entire maturity amount becomes taxable under "Income from Other Sources".

– However, death benefit is always tax-free.

– Also note: From FY 2023-24, high premium policies (total annual premium above Rs 5 lakh) have additional tax rules.

– But your premium is only Rs 40,000, so these new rules will not apply.

? If 10(10D) Exemption Is Lost, Then

– You have to pay tax on maturity proceeds as per your income slab.

– Only the amount received above the total premiums paid will be treated as taxable.

– For example, if you receive Rs 3 lakh maturity and you paid total Rs 2.4 lakh premiums (over 6 years), then Rs 60,000 is taxable.

– Tax rate will be as per your applicable income tax slab.

? TDS Rules to Remember

– If the maturity amount is taxable, TDS at 5% will be deducted on income portion only.

– If you submit Form 15G/15H (and eligible), you may avoid TDS.

– But still, you will have to show the income in your ITR and pay tax as needed.

? What You Can Do Now

– Check your policy document or online account for exact sum assured.

– If sum assured is 10 times or more of annual premium (Rs 40,000), then you’re safe.

– The maturity amount will be tax-free under Section 10(10D).

– If not, calculate the taxable portion and plan to declare it in your ITR.

– Consider consulting a Certified Financial Planner for accurate reporting and reinvestment advice.

? Final Insights

– With Rs 40,000 premium, you’re likely within the tax-free zone if sum assured is Rs 4 lakh or more.

– New taxation rules on insurance do not affect you unless total annual premiums exceed Rs 5 lakh, which they don’t.

– Always keep maturity documents, premium payment proofs and policy details handy at tax filing time.

– For better long-term growth and tax efficiency, consider future investments in mutual funds through MFDs with CFP credential instead of insurance-linked investments.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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Nayagam P

Nayagam P P  |8642 Answers  |Ask -

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Asked by Anonymous - Jul 12, 2025Hindi
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My son is getting IIIT Vadodara IT, RVCE - CSE (specialization w/AI ML) and BITS - HYD Electronics and Instrumentation or MSc Nanoscience and Semiconductors at BITS Pilani. Which option would be the best? Consdering placements, college life, future scope etc. He has somwhat interest in IT related branches, Will ENI @ BITS Hyd be good? Can he get into somewhat IT related stuff through that branch? Same for Msc Semiconductor and Nanoscience @ BITS Pilani, is MSc degeee worth it? Is Dual degree (after first year a good option @ BITS?)
Ans: IIIT Vadodara’s IT programme, NBA-accredited since 2013, reports a 2024 B.Tech placement rate of 61.4%, with an average package of ?11.34 LPA and median ?9 LPA across 53 recruiters, supported by project-based learning and industry tie-ups. RVCE’s CSE (AI & ML) specialization leverages its 100% CSE placement tradition, achieving a 75% placement rate in 2024 (93% in 2023) and an average CSE package of ?19 LPA through top firms like Microsoft and Cisco, within a vibrant campus culture and active student clubs. BITS Hyderabad’s Electronics & Instrumentation offers 60 seats, practice-school internships, and around 95% placement consistency with an average ?14–15 LPA, backed by NAAC A++ accreditation and cutting-edge digital-manufacturing labs. BITS Pilani’s newly introduced M.Sc. in Semiconductor and Nanoscience, aligned with the India Semiconductor Mission and National Quantum Mission, provides interdisciplinary training in nanofabrication and device physics, strong ISRO/DRDO collaborations, but lacks placement data due to its 2025 launch; prospective dual-degree switches to B.E. are limited to top performers after the first year and are highly competitive.

Recommendation: For immediate IT alignment and strong core outcomes, opt for RVCE CSE (AI & ML); choose IIIT Vadodara IT for balanced placement and academic rigor; pursue BITS Hyderabad E&I if instrumentation and IoT appeal; join BITS Pilani M.Sc. only if committed to research and willing to navigate the competitive dual-degree pathway. All the BEST for Admission & a Prosperous Future!

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Nayagam P

Nayagam P P  |8642 Answers  |Ask -

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Sir, for my daughter, Which is better? IIITDM Kancheepuram Smart Manufacturing or VNIT Nagpur Meatallurgical and Materials Engineering or IIIT Trichy ECE or drop an year to target IITs next year? No inclination to any specific branch, but having interest to do Masters abroad after Engineering, thanks
Ans: Sadhana Madam, Among the four pathways, IIITDM Kancheepuram’s Smart Manufacturing programme stands out for its interdisciplinary curriculum that merges advanced manufacturing processes, Industry 4.0 technologies, IoT, big data analytics, and robotics within a government-funded Institute of National Importance framework, supported by five-month industry internships and modern digital-manufacturing and CPS labs. VNIT Nagpur’s Metallurgical & Materials Engineering, a four-decade-old NIT ranked 39th by NIRF, offers a rigorous core materials-science syllabus, well-equipped failure-analysis and pilot-plant facilities, strong research projects with R&D organisations, and extensive testing and consultancy collaborations. IIIT Trichy’s ECE, under the PPP model and NAAC A+ accreditation, delivers a focused VLSI, embedded-systems, and sensor-networks curriculum with small cohorts and dedicated laboratories, along with fellowship support for overseas research aspirations and integrated national scholarships. Opting to take a drop year to aim for IIT entrance may enhance access to premier institutions but carries considerable opportunity cost and uncertain success without exceptional discipline and coaching.

recommendation Prioritize IIITDM Kancheepuram Smart Manufacturing for its cutting-edge, interdisciplinary design-and-manufacturing focus and robust experiential learning that align with overseas master’s ambitions; consider IIIT Trichy ECE next for its specialized labs and fellowship pathways; choose VNIT Nagpur MME for its deep materials-research ecosystem; avoid dropping a year unless fully prepared for the competitive rigor required to secure an IIT seat. All the BEST for Admission & a Prosperous Future!

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Nayagam P

Nayagam P P  |8642 Answers  |Ask -

Career Counsellor - Answered on Jul 12, 2025

Asked by Anonymous - Jul 12, 2025Hindi
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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