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Mahesh

Mahesh Padmanabhan  | Answer  |Ask -

Tax Expert - Answered on Feb 01, 2023

Mahesh Padmanabhan has specialised in payroll, personal and corporate taxation for more than two and a half decades, enabling him to provide practical, realistic and correct advice to his clients.
He is a member of The Institute of Chartered Accountants of India and has a degree in cost accounting from the Institute of Cost Accountants of India.
He is also a qualified information systems auditor. ... more
Raghunath Question by Raghunath on Feb 01, 2023Hindi
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Under the new tax regime, will we be able to claim deduction under section 80 CCD(2), that is, employer’s contribution to NPS? Or will that be taxable under new scheme?

Ans: Hi Raghunath
The deduction under section 80CCD(2) would be available under the new tax regime
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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Hello sir, I am currently a first year B.Tech student in Manipal Institute of Technology but I just got an offer from Singapore University of Technology and Design. Most of the people I talk to havent heard of it but from what I know its a really good college. The only thing is that the fees is much higher. So I am really having a hard time trying to decide what to do. I have been passionate about robotics since my childhood and want to study that further. I know that the education would be better in SUTD but to what extent? Would it justify the much higher fees? I would say my current focus is just developing skills in robotics and to get to know as much as i can in the same topic.
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Ramalingam

Ramalingam Kalirajan  |9924 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 29, 2025

Asked by Anonymous - Jul 12, 2025Hindi
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And we are still investing in mutual funds and plan to do so for next 5 years,my husband invests 30 k ,and i invest 45k
Ans: You and your husband are doing a fantastic job with your monthly investments. Investing Rs. 75K every month shows strong financial discipline. This consistent approach builds wealth and protects your future. Let us now assess your mutual fund journey from all angles.

? Current SIP Strength and Long-Term Potential

– Monthly SIP of Rs. 75K is a solid starting base.
– Over 5 years, this creates a strong corpus.
– Assuming growth, this will accumulate significant wealth.
– Your investing period of 5 years needs careful product selection.
– Short-to-medium term investing demands stability, not aggressiveness.
– Hence, fund selection must match time horizon and risk appetite.
– A Certified Financial Planner can guide scheme selection based on goals.

? Importance of Investment Tenure

– Five years is not a very long horizon.
– Hence, aggressive small-cap funds carry higher volatility.
– Stick to flexi-cap, large-cap, and balanced advantage categories.
– These offer better risk-reward balance in 5-year timeframe.
– Avoid overly sector-specific or thematic funds.
– Asset allocation should favour stability over chasing returns.

? Regular Plan Advantage vs Direct Plan Disadvantage

– Many investors choose direct plans for saving expense ratio.
– But they miss out on expert guidance from Certified Financial Planners.
– This increases chances of wrong fund selection or wrong exit timing.
– Wrong asset allocation or overlapping funds also impact returns.
– Regular plans through CFP-backed MFD offer holistic hand-holding.
– You receive periodic rebalancing, performance monitoring, and personalised reviews.
– The cost difference is minor compared to guided wealth creation.
– A goal-based approach with CFP supervision reduces regret and errors.

? Stay Away from Index Funds – Understand Why

– Index funds may look simple and low cost.
– But they carry hidden disadvantages often overlooked.
– Index funds invest passively in top companies of the index.
– They offer no downside protection in falling markets.
– No active strategy during volatile or sideways periods.
– Also, they follow market blindly, without fundamentals.
– In India, market inefficiencies offer space for active managers.
– Actively managed funds outperform index funds in India consistently.
– They are agile, selective, and dynamic in asset picking.
– Certified Financial Planners help choose best-performing active funds.

? SIP Strategy Review – Risk Alignment and Suitability

– Check how much of your Rs. 75K goes into high-risk funds.
– Avoid high exposure to small-cap and mid-cap segments.
– Cap allocation to these at 20%-30% max.
– Majority should be in balanced, large, or multi-cap funds.
– This reduces downside and improves consistency.
– Each fund must have a clear role and no overlap.
– Avoid too many funds for diversification.
– Keep portfolio compact with 5-7 funds only.

? Goal Planning – Tie Investments to Life Events

– If you have specific financial goals, allocate accordingly.
– Short-term goals should be in low-risk hybrid funds.
– Long-term goals may include child’s education, retirement, etc.
– Discuss these in detail with a CFP.
– This helps match investment type with goal duration.
– Also aligns growth expectation and exit strategy.
– Many investors miss their goals due to mismatched funds.
– Avoid this mistake by goal-based investment planning.

? Rebalance and Review Periodically

– SIPs need annual review to ensure alignment.
– Fund performance can vary due to many factors.
– A fund lagging for over 12 months needs attention.
– Also review sector exposure, overlap, and tax impact.
– A Certified Financial Planner will do this periodically.
– Rebalancing helps protect from over-concentration.
– It also captures gains and shifts to better opportunities.

? Tax Planning within Mutual Fund Framework

– Mutual fund taxation impacts your net returns.
– For equity funds, STCG is taxed at 20%.
– LTCG above Rs. 1.25 lakh is taxed at 12.5%.
– For debt funds, gains taxed as per income slab.
– Plan exits smartly to reduce tax outgo.
– Use tax-harvesting if nearing 1.25 lakh LTCG.
– Align exit strategy with fund performance and tax limits.
– Don't ignore taxation; it quietly erodes final returns.

? Avoiding Insurance-Cum-Investment Products

– If you or your husband have LIC, ULIP, or money-back plans, evaluate them.
– These offer poor returns and low flexibility.
– Surrender such policies if lock-in is over.
– Reinvest in mutual funds with proper planning.
– This boosts compounding and improves goal alignment.
– Don’t mix insurance with investment ever.
– Treat them as separate needs for better results.

? Protecting Your Investment Journey

– SIPs should not stop even in bad markets.
– Market dips are best times to accumulate more units.
– Avoid emotional decisions during correction periods.
– Stay patient and continue monthly contributions.
– Rupee Cost Averaging helps reduce risk over time.
– If income reduces, lower SIP, but never stop.
– Stay consistent and disciplined for long-term success.

? Emergency Fund and Insurance Backup

– Ensure emergency fund is at least 6 months’ expenses.
– This avoids disturbing SIPs during sudden financial stress.
– Also review life and health insurance coverage.
– Ensure it is sufficient and updated.
– Use term insurance for life cover, not ULIPs.
– Use family floater health insurance for medical needs.

? When 5 Years End – Exit and Reinvestment

– Start planning your exit 12-18 months before maturity.
– Move funds gradually to safer options.
– This protects capital from market corrections.
– Consider conservative hybrid funds near withdrawal time.
– Don’t wait till last month to act.
– Also plan next set of goals and reinvestment.
– Don’t keep funds idle after 5 years.
– Reinvest based on new goals or income needs.

? Keep Emotions Out, Data In

– Emotional investing leads to poor decisions.
– Don’t chase top performers each year.
– Choose funds with consistent 5+ year track records.
– Also check downside protection, not just returns.
– Use data, not marketing material, for fund choices.
– A Certified Financial Planner uses professional tools for selection.
– Stay objective, not reactive.

? Avoid Investment Myths and Social Advice

– Friends or relatives may suggest schemes casually.
– Their risk appetite may not match yours.
– Also avoid YouTube tips or WhatsApp forwards blindly.
– Many half-truths and old advice circulate online.
– Follow structured and professional guidance only.
– Choose investments based on your family needs.
– Don’t compare portfolios or returns with others.
– Your journey is unique.

? Final Insights

– Your joint SIP effort of Rs. 75K/month is admirable.
– Continue this for 5 years with discipline and strategy.
– Choose funds based on goal, risk, and time.
– Avoid index and direct funds to stay protected.
– Take guidance from Certified Financial Planner regularly.
– Link each investment to a goal and review annually.
– Protect capital near goal maturity using low-risk funds.
– Use regular plans for full support and peace of mind.
– Don’t mix insurance with investment at any stage.
– Maintain emergency fund and review risk coverage.
– Reinvest matured corpus based on next life phase.
– Keep simplicity, discipline, and patience in investing.
– Long-term wealth is created through consistency, not luck.
– Keep up your good work and grow steadily.

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

...Read more

Ramalingam

Ramalingam Kalirajan  |9924 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 29, 2025

Money
I have two PF account nos. under in a single UAN. I retired from the 1st origination in the month of sept 2020 after attains the age of 58 years and join 2nd origination in May 2022 (as per PF department records) and continue till now. The EPFO department Stop to credit my interest in the Ist account w.e.f. sept 2023 (Aprox) and continue to provide interest in 2nd account till now. I visited earlier several times in connection with higher pension from the beginning from June 2023 the date of application submitted for higher pension. As the amount to be taken from my account /deposited by me with interest for higher pension settlement as required by department. On enquiring at that time during my visit, the dealing official of the department informed me that the amount after demand with interest will be taken from my Ist account only as the case of higher pension pertain to ist origination and not for 2nd one. In view of this I have not transfer / withdraw the amount from Ist account. Finally on several visit and request I have been issued demand notice dated 28-04-2025 to deposit by 30-04-2025 Rs. 1157109 or by 31.05.2025 Rs. 1164916 or by 30.06.2025 Rs. 1172721 with a joint request Form. All the required forms with employer authenticity deposited well with in time. The amount required for higher pension still as of today 13-07-2025not debited or transfer from my account. It is to inform here that there is a balance as of today with interest as on sept.2023 is Rs.9366305/- (INTEREST LOSS OF Rs. 14.16 LAC APROX TILL NOW.) IN VIEW OF THE ABOVE FACTS--- Please advise me what should I do and also confirm the rules for the same to square up the matter with department. Kul Bhushan Rana
Ans: – You have shared your situation clearly and patiently.
– You are taking efforts for your rightful higher pension.
– That shows financial awareness and future planning.
– You have stayed consistent with EPFO visits and followed their process.
– That discipline is truly worth appreciating.

? Understanding the Two PF Accounts Under One UAN
– You retired from the first organisation in Sept 2020 after turning 58.
– You joined the second organisation in May 2022.
– Both PF accounts are under one UAN, which is valid.

– Interest stopped on the first account from Sept 2023.
– This is common when PF becomes inoperative.
– As per EPFO rules, interest stops after 3 years of no contributions.

– You were told your higher pension dues will be debited from the first account.
– That is correct, since higher pension application is linked to first service.

? Why Interest Stopped in the First PF Account
– As per current EPFO rules, interest is credited only when account is active.
– If no fresh contributions after 36 months, account becomes inoperative.
– That is why interest was not credited after Sept 2023.

– Even though you did not withdraw, account is inactive.
– Hence, interest loss of Rs. 14.16 lakh happened.
– This situation could have been avoided with timely fund transfer.

– But since EPFO informed you not to transfer or withdraw, you followed guidance.
– So the delay is not from your side, but from the department's delay in debit.

? Higher Pension Demand Notice and Delay in Debit
– You received demand notice on 28-04-2025.
– You were given amount and deadline options till 30-06-2025.

– You submitted joint request form and employer authentication within deadline.
– That shows you followed all instructions sincerely.

– But as of 13-07-2025, amount still not debited from first PF account.
– That delay has caused further interest loss to you.

– This is where department processing failure has caused financial damage.
– You have a valid reason to request interest restoration.

? What You Can Do Now: Step-by-Step
– Please write a formal letter to your EPFO Regional Commissioner.
– Mention full details of your UAN, both PF numbers and service periods.
– Explain clearly the timeline of your application, visits, submissions.

– Attach copy of demand notice and receipt of form submission.
– Highlight clearly that department advised to not withdraw or transfer first PF.
– So you kept funds there only for higher pension settlement.

– Mention the delay from EPFO side in debiting your dues.
– Due to that, you suffered Rs. 14.16 lakh interest loss.

– Request them to process debit immediately and update pension calculation.
– Also request interest restoration or compensation due to their delay.

– Keep copy of letter and get acknowledgement from EPFO office.
– Also send same via registered post or speed post to maintain proof.

? Other Follow-Ups to Take in Parallel
– File a grievance on EPFO official portal under "Higher Pension - Settlement".
– Explain same points in simple words with date-wise entries.
– Upload supporting documents like demand notice and bank proof.

– After 15 days, file RTI to EPFO to ask for action status.
– Ask why debit not done and interest not compensated.
– Ask for name and designation of person responsible for delay.

– This puts legal pressure and speeds up department response.

? Higher Pension and Interest – Rules and Reality
– EPFO higher pension scheme is based on Supreme Court ruling.
– Eligible employees can shift from EPS wage limit to full salary for pension.

– Employees retiring after Sept 2014 with joint option and contribution are eligible.
– Pension is based on last drawn salary and service duration.

– When applying for higher pension, EPFO allows employee to pay shortfall.
– This can be done through PF account or external payment.

– In your case, PF balance was enough to cover demand.
– But EPFO delay has caused interest loss.
– Rule does not allow interest on inoperative PF after 3 years.

– But if delay is due to department error, you have right to raise claim.

? You Can Also Approach EPFO Zonal Office
– If local office does not act, escalate to Zonal EPFO office.
– Carry all documents and submit grievance with written letter.
– Politely explain financial loss and request immediate resolution.

– Zonal office has more power and senior officials.
– Their intervention often helps speed up things.

? Legal Option as Final Step (Only if Needed)
– If still no response after all efforts, send legal notice.
– A notice from your advocate can mention service record, forms, interest loss.

– It should demand debit of funds and compensation for interest.
– This step may push EPFO to close the matter without going to court.

– But legal option should be last resort, after exhausting all department levels.

? Tips to Prevent Future PF Related Losses
– Always take written record of any advice given by EPFO staff.
– Do not depend on verbal instructions alone.

– Always follow up in writing when EPFO gives timeline.
– Keep copies of every form, acknowledgement, screenshot.

– Transfer old PF to active account after retirement if no advice from EPFO.
– Keep account active to continue earning interest.

– Maintain full file of pension-related papers for future needs.

? Finally
– You have shown great patience and effort in following the pension process.
– You have every right to get higher pension and fair treatment.

– EPFO delay is causing financial loss and mental stress.
– With written communication and RTI, you can demand quick resolution.

– Keep calm but stay persistent.
– You will be able to close the matter with rightful benefits.

– Your discipline in record-keeping and action is praiseworthy.
– Please keep moving step by step as explained above.

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

...Read more

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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