Hi , Iam 40 , and divorced , I Recently met a girl in my office , who is just a fresher and we have a gap of around 15 Years. Is it Ok to Continue relationship with this girl ? is the Age Gap Too Much to Handle. Should i withdraw from the relationship at the earlier stage itself rather than getting into it and later break up?

Ans: It will be taxable as Long term capital gain. You have to get fair market value as on 1.4.2001 and after applying indexation on said value you can derive at amount of capital gain.

To save tax on long term capital gain; you can invest gain amount to acquire house property and get exemption u/s 54. As per section 54, if you want to buy a residential house property from long term capital gain from sale of house property then you must buy the residential house property 1 year before or 2 years from date of such transfer of shares or construct the house property within 3 years from date of transfer of such property.

Ans: It is likely that PAN and Aadhar will be linked even in case of mismatch is residential status

Ans: It depends on type of scheme (equity or debt based scheme).

Short Term or Long Term depends on period of holding. Debt based scheme are always short term and taxable at slab rate. Equity based scheme are long term if it is sold after holding for 12 month or more. Long term capital gain on equity scheme is taxable at NIL rate upto 1 lacs of gain.

Ans: Yes, if you redeem MF, capital gain on MF is taxable. Depending type of scheme (equity/debt MF), tax rate will be applicable.

ITR filing in Mandatory for Individual having gross total income of more than 2.5L (Before 54 series exemption) or Deposit > 1 Cr in Current A/c OR Expense > 2 L for Foreign Travel Or Expense > 1 L for Electricity Or Sales > 60 L - Gross receipt profession > 10 L OR TDS/ TCS > 25K ( 50K senior citizen) OR Deposit > 50 L in Saving A/c

Ans: Yes DA is taxable

Ans: No, unfortunately, you cannot claim the penalty levied on premature withdrawal of your fixed deposits (FDs) as a deduction while filing your Income Tax Return (ITR).

Here's why:

Income vs. Expense: The penalty on FD withdrawal is considered an expense incurred for breaking the terms of the deposit agreement. It's not directly related to earning income from the FD interest.
Tax Deductions: Income tax deductions are allowed for expenses incurred for generating taxable income. The penalty on FD withdrawal doesn't fall under this category.
Taxation on FD Interest for Senior Citizens:

Even though you cannot deduct the penalty, there might be some relief on the interest income itself:

Section 80TTB: If your total interest income from all FDs and Savings accounts is less than ?50,000 per year, you can claim a deduction under Section 80TTB of the Income Tax Act. This eliminates tax liability on that interest income.
No TDS for Senior Citizens: For senior citizens (above 75 years old), banks don't deduct TDS (Tax Deducted at Source) on FD interest up to ?50,000 per year from a specified bank where you receive your pension.
Recommendations:

Plan for Premature Withdrawals: If you foresee needing the money before the FD matures, consider shorter tenure FDs or opting for partially withdrawable FDs to avoid penalties.
Explore Tax-Saving Options: Look into tax-saving fixed deposits or senior citizen savings schemes (SCSS) that offer better interest rates and may not have high penalties for premature withdrawal.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: I appreciate your detailed overview of your financial situation and your proactive approach to investing. Let's address each of your queries systematically to ensure we cover all aspects comprehensively.

1. Taxation on Shares and Mutual Funds: As an NRI, capital gains tax rules apply to your investments in shares and mutual funds in India. For equity investments held for over one year, long-term capital gains (LTCG) are taxed at 10% without indexation. For mutual funds, equity-oriented funds are treated similarly. However, if you become a resident Indian again, you'll be taxed as per the applicable resident Indian tax laws. Increasing your SIPs by 5-10% annually is a prudent strategy, especially considering your long-term investment horizon and the power of compounding. Regarding international funds, they can provide diversification benefits, especially during periods of rupee depreciation, but ensure you understand the associated risks before investing.

2. Investment in Fixed Deposits and Government Bonds: As an NRI, you are eligible to invest in fixed deposits and government bonds in India. Interest earned on fixed deposits is taxable in India, subject to applicable tax laws. Government bonds also carry tax implications, but specific rules depend on the type of bond and your residential status. Given your current location in Saudi Arabia, consider exploring NRI-specific investment options like NRE or NRO fixed deposits, which offer tax benefits and repatriation flexibility.


3. Investment Strategy: Diversification is key to a well-rounded investment portfolio. Equity investments offer long-term growth potential, while debt instruments like PPF provide stability and tax benefits. Considering your risk appetite and investment goals, continue your SIPs in equity mutual funds, but ensure you have an adequate emergency fund in place. Explore options like international funds for global exposure and consider increasing exposure to debt instruments for capital preservation.

4. Investment Considerations for NRIs: As an NRI, it's essential to stay informed about regulatory changes and tax implications related to your investments in India. Additionally, consider factors like currency risk, repatriation restrictions, and geopolitical developments when making investment decisions. Regularly review your portfolio and consult with a financial advisor to optimize your investment strategy based on changing market dynamics.


5. Early Retirement Planning: Achieving early retirement requires careful financial planning and disciplined saving and investing. Start by setting clear retirement goals, estimating your future expenses, and determining the required corpus. Maximize contributions to tax-efficient retirement accounts like EPF, PPF, and NPS. Consider allocating a portion of your portfolio to growth-oriented assets like equity mutual funds to generate inflation-beating returns over the long term. Regularly reassess your retirement plan and adjust your investment strategy as needed to stay on track towards your retirement goals.

By following a systematic approach to investing, staying informed about regulatory changes, and regularly reviewing your financial plan, you can work towards achieving financial stability and early retirement.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

Ans: It's great to see your commitment to building your investment portfolio. Let's review your current mutual fund investments and see if any adjustments are needed to align with your goal of accumulating a corpus of ?50 lakhs by the age of 40.
Your current allocation seems well-diversified across various mutual fund categories, including small-cap funds, ELSS tax savers, and sector-specific funds like SBI PSU and Aditya Birla Sunlife PSU equity funds. However, there are a few points to consider:
1. Small-Cap Funds: Investing in small-cap funds can offer high growth potential but comes with increased risk due to market volatility. Since you're relatively new to mutual fund investments, ensure you have a high risk tolerance and a long-term investment horizon for these funds.
2. ELSS Tax Saver Funds: It's wise to continue investing in ELSS funds to avail tax benefits under Section 80C. However, having multiple ELSS funds may lead to duplication of holdings and increase complexity without significantly diversifying your portfolio. Consider consolidating your ELSS investments into one or two funds with a proven track record and consistent performance.
3. Sector-Specific Funds: Funds like SBI PSU and Aditya Birla Sunlife PSU equity focus on specific sectors, which can be volatile and dependent on sectoral performance. While they offer the potential for high returns, they also carry higher risk. Ensure these funds complement your overall portfolio strategy and are not over-concentrated in a single sector.
4. PPF Investment: Investing in PPF is a good strategy for long-term wealth accumulation and tax-saving. However, keep in mind that PPF has a lock-in period of 15 years, so ensure it aligns with your liquidity needs and investment goals.
Considering the above points, here are some suggestions:
• Evaluate the performance of your existing funds and consider consolidating your ELSS investments into one or two funds with strong fundamentals and consistent performance.
• Monitor the performance of small-cap funds closely due to their higher volatility and consider rebalancing your portfolio if needed.
• Review your sector-specific fund investments periodically and ensure they align with your risk tolerance and investment objectives.
Lastly, it's essential to regularly review your investment portfolio and make adjustments as needed to stay on track towards your financial goals.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

Ans: You're right to be questioning the GST implications in this situation. Here's a breakdown of your queries:

GST Rate on Development Services: The GST rate for construction services on an immovable property (land + building) is generally 5%. However, there's an exception for affordable housing projects, where the rate is 1%.

Sharing of GST by Landowners and Purchasers: Since the sale deed is directly between you (purchaser) and the landowner (vendor), you are not obligated to pay 1/6th of the GST paid by the landowner to the developer. You'll only pay GST on the value mentioned in your sale deed.

GST on Land Cost: The developer cannot demand GST on the entire cost of the flat, including the undivided land share. GST applies to the value of services rendered (construction) and not the land itself.

GST on Ready-to-Move Flats: The GST rate of 1% for ready-to-move flats only applies to completed projects where the occupancy certificate has been issued. In your case, it's an under-construction project, so the 5% rate applies.

Here's how the GST should ideally work in your scenario:

The developer pays GST to the government on his service charges for constructing the flats (5% of his construction cost).
The landowner pays stamp duty and registration charges on the land value mentioned in your sale deed.
You, the purchaser, pay GST to the developer on the value mentioned in your sale deed (excluding land cost) at the rate of 5% (assuming it's not an affordable housing project).
Recommendations:

Ask the developer to provide a breakup of the total cost, clearly mentioning the land cost and construction service charges.
Pay GST only on the construction service charges mentioned in your sale deed.
If the developer insists on including GST on the land cost, consult a tax advisor to understand your rights and explore further options.
Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in