I shall be grateful if you could kindly arrange reply to my following tax query.

My daughter was NRI for F.Y. 2018-19 as well as 2019-20. She had some income in India during both F.Y.s by way of Dividend/Interest from her investments, as also capital gains from sale of shares / mutual fund units, total of which was less than Rs.1,50,000 during each of these 2 years. She was a student abroad during whole of F.Y. 2018-19. She was employed during part of F.Y. 2019-20 (less than six months) and drew income by way of salary. 

1. Is she required to file return of Income in India for A.Y. 2019-20 and A.Y. 2020-21?

Anil Rego An NRI whose income is below the basic exemption limit is required to file an income tax return in India if:

1. One has short term capital gains on equity which is taxable
2. One has long term capital gains on any asset, which are chargeable to tax
3. Has any income chargeable to tax irrespective of the basic exemption limit

Please note the above since you have mentioned that there was capital gain in her account.

If yes, which ITR forms should she be using?

Ans: This is a kind of tremor but not necessarily Parkinson's. There are many other causes like essential tremor which runs in families, thyroid problems and other such conditions. So you should get and examination done by a neurologist or a physician.

Ans: Timing the market can be challenging, and attempting to predict the right time to book profits in small and mid-cap mutual funds involves a degree of uncertainty. It's essential to base your decisions on your financial goals, risk tolerance, and investment horizon rather than trying to time short-term market movements.

Instead of focusing on timing the market, consider reviewing your investment portfolio regularly to ensure it remains aligned with your objectives. Evaluate the performance of your small and mid-cap mutual funds relative to your investment goals and make adjustments if necessary.

If you've achieved your target returns or if your investment objectives have changed, it may be prudent to consider booking partial profits. However, selling your entire investment in small and mid-cap funds solely based on market timing can be risky, as you may miss out on potential future gains.

Before making any decisions, consult with a Certified Financial Planner who can provide personalized advice based on your individual circumstances and investment goals. They can help you assess the suitability of booking profits in your small and mid-cap mutual funds and provide guidance on portfolio rebalancing to optimize your overall investment strategy. Remember, staying disciplined and focused on your long-term financial goals is key to investment success.

Ans: investing in SIPs (Systematic Investment Plans) is a smart way to build wealth over the long term. With a time horizon of 10 to 15 years, you have the opportunity to benefit from the power of compounding and potentially higher returns from equity investments. Here's a suggestion for a diversified SIP portfolio:

Large Cap Fund: Allocate a significant portion of your SIP amount to a large-cap fund. These funds invest in established companies with a proven track record and offer stability to your portfolio.
Flexi Cap Fund: Opt for a flexi-cap fund that provides the flexibility to invest across companies of various market capitalizations based on market conditions. This offers exposure to both large, mid, and small-cap segments, enhancing diversification.
Mid Cap Fund: Allocate a portion of your SIP to a mid-cap fund, focusing on companies with medium market capitalization. Mid-cap companies have the potential for significant growth, providing an opportunity for higher returns over the long term.
Small Cap Fund (Optional): Depending on your risk appetite, you may consider including a small-cap fund in your portfolio. These funds invest in smaller companies with the potential for rapid growth, albeit with higher volatility.
By focusing on large-cap, flexi-cap, and mid-cap funds, you create a well-diversified SIP portfolio that balances stability with growth potential. Before finalizing your investment decisions, assess your risk tolerance and consult with a Certified Financial Planner to ensure your portfolio aligns with your long-term financial goals. Remember to stay disciplined and review your portfolio periodically to make any necessary adjustments.

Ans: It's great to hear that you're proactively planning your investments. Your choice of funds reflects a balanced approach across different market segments, which is commendable. UTI Nifty 50 index fund offers stability, while Parag Parikh Flexi cap fund, ICICI Prudential Midcap 150 index fund, and Quant flexi cap fund provide diversification and potential for growth.

Given your investment horizon of 3 years with regular SIPs and additional purchases during market dips, it's essential to stay vigilant and adjust your strategy as needed. Since you anticipate a job loss by 45, it's wise to build a robust emergency fund and reassess your financial situation accordingly.

Regarding expected returns, it's crucial to note that past performance is not indicative of future results. However, historically, equity investments have provided higher returns over the long term compared to fixed-income options like FDs. With a diversified portfolio like yours, you may expect returns in line with market performance, but it's essential to remain flexible and adapt to changing market conditions.

Considering your age and risk tolerance, ensure you periodically review your portfolio and make adjustments as needed. Consulting with a Certified Financial Planner can provide personalized guidance tailored to your financial goals and circumstances. Overall, your approach seems well-thought-out, but ongoing monitoring and adaptability will be key to achieving your investment objectives.

Ans: Sham, while guaranteed return schemes offer stability, it's crucial to note their limitations. Such schemes often yield lower returns, failing to outpace inflation over time. Consequently, the real value of your investment may decrease due to the erosion of purchasing power. Instead, consider alternatives like Systematic Withdrawal Plans (SWP), which provide flexibility and potential for higher returns. SWP allows you to withdraw a fixed amount regularly from your investment, providing a steady income stream while potentially preserving your capital's value better than guaranteed schemes. Before deciding, consult with a Certified Financial Planner to explore options that align with your financial goals and risk tolerance.

Ans: It's commendable that you're actively managing your mutual fund portfolio to align with your financial goals, especially with retirement on the horizon. Your diversified approach across various mutual fund categories reflects a well-thought-out strategy.

Starting SIPs in UTI Nifty 50 index fund, Parag Parikh flexicap, Quant flexi cap, ICICI Midcap 150 index fund, and Kotak large & midcap fund indicates a mix of passive and active strategies catering to different market segments. This diversification can potentially help mitigate risk while optimizing returns over time.

Given your investment horizon of 2-3 years for SIPs and a plan to hold the accumulated amount for the next 5 years, it's crucial to regularly review your portfolio's performance and make adjustments as needed. Additionally, ensure that your overall asset allocation remains in line with your risk tolerance and retirement timeline.

Considering your existing investments in equity shares, SGBs, and FDs, maintain a balanced allocation that aligns with your retirement goals and risk appetite. Consulting with a Certified Financial Planner can provide personalized guidance and ensure your investment strategy remains on track towards achieving your retirement objectives. Keep up the proactive approach, and with disciplined investing and periodic reassessment, you're on the right path towards a secure retirement.

Ans: It's admirable that you're thinking ahead about your financial future and seeking ways to build a robust portfolio for retirement and early financial freedom. With your disciplined approach towards existing investments like SIPs, PPF, and LIC, you're already laying a strong foundation.

Considering your net take-home pay and existing commitments, it's essential to strike a balance between debt repayment and wealth accumulation. As your home loan nears completion in five years, redirecting the freed-up funds towards high-yield investments like mutual funds or National Pension System (NPS) can accelerate your journey towards financial independence.

A Certified Financial Planner can help tailor a diversified investment strategy that aligns with your goals and risk tolerance, optimizing returns while mitigating risks. Remember, achieving financial freedom requires patience, discipline, and a long-term perspective. By staying committed to your financial plan and periodically reviewing and adjusting it as needed, you can pave the way towards a secure and fulfilling future.

Ans: It sounds like you're facing a challenging situation, balancing financial concerns with family dynamics. Selling your flat could offer a solution to alleviate financial stress, but it's essential to consider the implications for your parents and daughters.

Firstly, have an open and honest conversation with your parents about your financial situation and the reasons behind your decision to sell the flat. Express your concerns and listen to their perspectives with empathy. Understandably, they may have emotional attachments to the property, but they might also prioritize your well-being once they understand your predicament.

Consider exploring alternative options to address your financial needs without selling the flat immediately. Are there other sources of income or financial assistance available to you, such as part-time work, freelancing, or government support programs? Additionally, you could explore the possibility of renting out a portion of the flat to generate rental income while retaining ownership.

Given that your daughters are still pursuing their education, prioritize their needs and well-being in your decision-making process. Selling the flat could potentially impact their future plans, so ensure they are involved in the discussion and their concerns are addressed.

Ultimately, the decision to sell the flat should be made after careful consideration of all factors, including your financial needs, family dynamics, and future aspirations. Consulting with a financial advisor or counselor could provide valuable insights and assistance in navigating this situation delicately and responsibly. Remember, prioritizing open communication, empathy, and mutual understanding is key in resolving family-related financial matters.

Ans: Building a corpus of 1.5 crores in 7 years is an ambitious goal, but with careful planning and disciplined investing, it's achievable. Since you already have some SIPs and small FDs in place, you're on the right track. Here's a suggested approach to help you reach your target:

Review and Optimize SIPs: Evaluate your existing SIPs and consider increasing the contribution amounts if possible. Ensure that your SIPs are invested in diversified mutual funds that align with your risk profile and investment goals. Regularly monitor their performance and make adjustments as needed.
Increase Savings: Look for opportunities to increase your savings rate by cutting down on non-essential expenses and redirecting those funds towards your investment goals. Consider setting up systematic investment plans for larger amounts to accelerate wealth accumulation.
Explore High-Yield Investments: Since your FDs are relatively small, consider exploring higher-yield investment options such as equity mutual funds, which have the potential to generate higher returns over the long term. However, be mindful of the associated risks and ensure your investment strategy aligns with your risk tolerance.
Diversify Your Portfolio: Don't put all your eggs in one basket. Diversify your investment portfolio across different asset classes like equity, debt, and possibly real estate or gold, depending on your risk appetite and investment horizon. This can help mitigate risk and optimize returns.
Seek Professional Advice: Consider consulting with a Certified Financial Planner to tailor a comprehensive financial plan that aligns with your goals and risk tolerance. They can provide personalized guidance, recommend suitable investment strategies, and help you stay on track towards achieving your target corpus.
Remember, achieving financial goals requires discipline, patience, and a long-term perspective. Stay focused on your objectives, regularly review your progress, and make adjustments as necessary to stay on course towards building your desired corpus.