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Will my MF gain of Rs.90K in 3 years be taxed upon redemption?

Ramalingam

Ramalingam Kalirajan  |8615 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 13, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - Aug 07, 2024Hindi
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My MF is 3 year old and gained 90k, will this gain attract tax, if i redeem?

Ans: Yes, the gain will attract tax if you redeem.

Here’s how it works:

Equity Mutual Funds: Gains from equity mutual funds held for more than one year are considered long-term capital gains (LTCG).

LTCG Tax: If your total LTCG in a financial year exceeds Rs 1.25 lakh, the excess amount is taxed at 12.5% without the benefit of indexation.

In Your Case: Since your gain is Rs 90,000 and below the Rs 1.25 lakh exemption limit, you won’t pay any tax on this gain if you redeem now.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
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  |8615 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 27, 2024

Asked by Anonymous - Jun 28, 2024Hindi
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Hi Do i have to pay any taxes during the redemption of mutual fund i have a corpus of 12 lakhs N wat inestment plan i should hv for my 17 yr old daughter n 8 yr old son with monthly investment of 20k
Ans: When you redeem mutual funds, you may need to pay taxes. This depends on the type of mutual fund and the holding period.

Equity Funds: Gains from equity mutual funds held for over a year are long-term capital gains (LTCG). LTCG over Rs 1 lakh are taxed at 10%.

Debt Funds: Gains from debt funds held for over three years are long-term capital gains. These are taxed at 20% after indexation. Gains from debt funds held for less than three years are short-term capital gains (STCG). STCG are added to your income and taxed as per your income tax slab.

Hybrid Funds: Taxation depends on the equity and debt components. For hybrid funds with over 65% equity, taxation is like equity funds. Otherwise, it is like debt funds.

Ensure to consult a tax professional for detailed guidance on your specific case.

Investment Plan for Your Children

Investing for your children's future is crucial. Here’s a structured plan for your 17-year-old daughter and 8-year-old son.

Assessing Goals and Time Horizons

Daughter: She will need funds soon for higher education or other expenses. Your investment horizon is short-term (1-3 years).

Son: You have a longer horizon (10+ years) for his higher education and other goals.

Short-Term Investment Strategy for Your Daughter

Since you need funds soon, opt for safer investments.

Debt Mutual Funds: Suitable for short-term goals. They offer better returns than savings accounts and fixed deposits.

Liquid Funds: They are low-risk and provide reasonable returns. Suitable for funds needed in a year or less.

Ultra-Short Duration Funds: These are slightly higher risk but can offer better returns than liquid funds.

Long-Term Investment Strategy for Your Son

You have time to take advantage of the power of compounding.

Equity Mutual Funds: These are ideal for long-term goals. They offer higher returns but come with market risks.

Diversified Equity Funds: They spread the risk across various sectors. Good for building wealth over the long term.

Systematic Investment Plan (SIP): Invest regularly in equity funds. This mitigates market volatility and averages out the cost of investment.

Balancing Your Investments

Regular Monitoring: Review your investments regularly. Adjust them based on market conditions and goal progress.

Diversification: Spread your investments across different asset classes. This reduces risk and optimizes returns.

The Benefits of Actively Managed Funds

Actively managed funds offer several advantages over index funds.

Potential for Higher Returns: Skilled fund managers aim to outperform the market.

Flexibility: Managers can make timely decisions based on market conditions.

Risk Management: Active funds can avoid poor-performing stocks or sectors.

Disadvantages of Direct Funds

Investing in direct funds has some drawbacks.

Lack of Guidance: You may miss out on professional advice.

Time-Consuming: Managing investments yourself requires time and effort.

Potential for Mistakes: Without expert guidance, there's a risk of making uninformed decisions.

Using Regular Funds with a Certified Financial Planner

Professional Advice: A Certified Financial Planner (CFP) can provide tailored advice.

Better Planning: CFPs help in aligning investments with your financial goals.

Peace of Mind: You get professional support, reducing stress and ensuring better financial health.

Final Insights

Investing for your children's future requires careful planning. Use debt funds for short-term needs and equity funds for long-term goals. Regular monitoring and professional advice will help you achieve your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

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Hello Sir, My son has secured a seat in VIT ECE depat in category 1, hoping fr getting a seat in NIT Surathkal in the dept of Mechanical engineering, as well as he wrote KCET and COMEDK as we come under Karnataka domicile, falling under OBC, he ll get ECE in RV Eng clg or MS Ramaiah thru' both the exams... Additionally he wrote IISER exam n scored 120 marks ... He's much interested in Physics n related to tht.. waiting fr JEE Advanced results as well.. So plz suggest which clg is better to choose...
Ans: Choosing between VIT ECE (Category 1), NIT Surathkal Mechanical, RVCE/MS Ramaiah ECE, and IISER depends on balancing institutional reputation, branch alignment, and career goals. VIT ECE offers robust industry exposure, ABET-accredited labs, and strong placements in electronics, ideal for IT transitions but less aligned with physics. NIT Surathkal Mechanical provides a prestigious NIT brand and core engineering pathways, though mechanical engineering diverges from pure physics interests. RVCE/MS Ramaiah ECE (via KCET/COMEDK) are top Karnataka colleges with rigorous curricula and placement networks, suitable for electronics careers. IISER (120 marks) aligns closely with physics passion, offering research-oriented BS-MS programs and academia pathways, though diverging from engineering. If JEE Advanced qualifies, newer IITs may offer engineering physics or allied branches. Prioritize IISER for science/research aspirations, NIT Surathkal for institutional prestige, or RVCE ECE for regional opportunities. VIT’s Category 1 ensures cost-effectiveness but lacks physics focus. Weigh immediate engineering prospects against long-term academic goals in fundamental sciences. My Suggestion: As far as IISER-IAT is concerned, consider this only if your Son is more interested in research studies compared to engineering. Also, consider only IISER Pune & Kolkata campuses. Secondly, prefer getting admission through JoSAA for IIT/NIT (depends upon your location/campus/branch preferences), followed by KCET, COMEDK and then VIT. All the BEST for your Son's Admission & a Prosperous Future!

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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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