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Financial Planner - Answered on Jun 09, 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

Question by Ramesh on Jun 09, 2022Hindi

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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.

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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I seek your expert advice on the following: 1. I am retired Government servant (MP) since 2006-age 76 with only income from pension 2. This year I had closed my PPF account and redeem TATA mutual fund TINFD -the amount is deposited in my Sbank account 3. I would like to know will there be any tax liability covering short/long term capital gain on the amount received. Hope you will provide me necessary advice

Ans: We suggest consulting a CA regarding the same.

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Question by Ganesh - Jul 13, 2021Hindi

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Thank you for all the advice in your column which I find very interesting. I have recently redeemed some mutual fund equity investments that fall into two categories. The first set are those I held for nearly 9 years and the second set is recent vintage as its average holding age is under 4 years. 1. What is the capital gains tax that I have to pay and how is it computed? 2. Is the exemption amount of Rs 2 lakhs available for capital gains also? 3. How to pay the CG tax amount and when is it due for payment? Many thanks for your advice.

Ans: Answer for 1 and 2

Short-term capital gains on redeeming your equity fund units within a holding period of one year are taxed at a flat rate of 15%, irrespective of your income tax bracket. Those funds exceeding one year holding period is treated as a long-term capital gain. The LTCG are exempted from tax up to Rs. 1,00,000 and any LTCG exceeding this limit shall attract a LTCG tax of 10%, and there is no indexation.

3. Paying capital gains is same as paying regular income tax. You have to go to the Income Tax India website and pay tax using challan ITNS 280.

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