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Anil

Anil Rego  |346 Answers  |Ask -

Financial Planner - Answered on Aug 26, 2022

Anil Rego is the founder of Right Horizons, a financial and wealth management firm. He has 20 years of experience in the field of personal finance.
He’s an expert in income tax and wealth management.
He has completed his CFA/MBA from the ICFAI Business School.... more
Sarvesh Question by Sarvesh on Aug 26, 2022Hindi
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I had redeemed all units of Mutual Funds in the month of January 2022 when Sensex was at its peak. Since more than 1 year has passed since the SIP installment started this comes under Long Term Capital gain. The long term capital gain is less then Rs 1 Lakh. As per Income tax rules these capital gains of up to Rs 1 lakh a year are tax-exempt. Do I still need to declare this amount while filing Income Tax returns for the financial year 2021-2022 or only if the long term capital gain is above Rs 1 lakh this amount needs to be declared while filing Income Tax returns for the financial year 2021-2022?

Ans: Even if your long term gain doesn’t exceed 1 lakh and there is no capital gain applicable for the sold mutual funds, you need to show this gains during the filing of FY2021-22 and claim an exemption up to Rs 1 lakh.

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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Ramalingam

Ramalingam Kalirajan  |5181 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 29, 2024

Asked by Anonymous - Nov 21, 2023Hindi
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Sir, I will be 80 years of age on 07 Feb, 2024. I have made some Long Term Capital Gains from Mutual Funds during this current financial year, 2023 - 24. I understand that senior citizens aged 80 years and above need not file any income tax returns. Please let me know whether I should pay the long term capital gains tax for this current financial year or need not.
Ans: Understanding Long Term Capital Gains Tax for Senior Citizens
Congratulations on your upcoming milestone of turning 80 on 07 February 2024. It's a significant achievement and I appreciate the wisdom that comes with it. Let's discuss the tax implications for your long-term capital gains from mutual funds in the current financial year, 2023-24.

Income Tax Rules for Senior Citizens
In India, senior citizens (aged 60 and above) and super senior citizens (aged 80 and above) enjoy certain tax benefits. These include higher exemption limits and additional deductions. For super senior citizens, the income tax exemption limit is higher compared to regular taxpayers.

Long Term Capital Gains (LTCG) Tax
Long-term capital gains (LTCG) from equity mutual funds are taxed at 10% if the gains exceed Rs 1 lakh in a financial year. This tax is applicable irrespective of your age or income bracket.

Filing Income Tax Returns
Super senior citizens, aged 80 years and above, are generally not required to file income tax returns if their income is below the exemption limit. However, this exemption does not apply to taxable long-term capital gains.

Need to Pay LTCG Tax
Even though you will be 80 years old, you need to pay long-term capital gains tax if your gains exceed Rs 1 lakh. The exemption from filing returns based on age does not exclude you from paying taxes on capital gains.

Importance of Compliance
It's important to comply with tax laws to avoid any penalties or legal issues. Paying your LTCG tax ensures that you stay within the legal framework.

Role of Actively Managed Funds
Actively managed funds have the potential to provide higher returns, which could lead to higher long-term capital gains. This makes it crucial to plan your tax liabilities accordingly.

Benefits of Regular Plans
Investing through regular plans with the guidance of a Certified Financial Planner ensures that you receive expert advice. This can help you manage your investments and tax liabilities effectively.

Avoiding Real Estate and Index Funds
Real estate investments and index funds are not recommended in this context. Actively managed funds provide better management and potential returns, which align with your financial goals.

Professional Advice
Consulting with a Certified Financial Planner can help you navigate the complexities of tax laws. They can provide personalized advice based on your financial situation.

Importance of Planning
Effective financial planning includes managing your tax liabilities. By understanding the tax implications of your investments, you can make informed decisions.

Regular Review
Regularly reviewing your investment portfolio ensures that it aligns with your financial goals and tax planning needs. A Certified Financial Planner can assist in this process.

Conclusion
Even at 80 years of age, paying long-term capital gains tax is necessary if your gains exceed Rs 1 lakh. Compliance with tax laws is crucial for financial health. Consulting with a Certified Financial Planner can help you manage your investments and tax liabilities effectively.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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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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