[blorebuddy]

Originally Posted by saket77

Redemption from liquid fund or STCG in equity schemes.

Regards,
Saket.

Can you please educate on tax on liquid funds if the option is dividend reinvestment? Do we need to pay tax for the dividends received? I heard that in this option there will not be much tax to pay as gains are stripped off and invested as fresh units

[pradkumar]

This is not an answer to your question, but talks about the tax advantage:

Here's a concrete example. Let's say you invest Rs 10 lakh in a mutual fund (liquid debt fund). A year later, the value of the investment has increased to Rs 10.80 lakh. Now, you want to withdraw the Rs 80,000 you have gained. Note that in the investment you hold, 7.4 per cent is the gain and the rest (92.6%) is the principal that you had invested. Here's the key part: when you withdraw any money, the withdrawal shall be deemed (for tax purposes) to consist of the gains and the principal in this same proportion. Therefore, of that Rs 80,000, only Rs 5,926 will be considered gains and will be added to your taxable income. This makes a gigantic difference. In an equivalent fixed deposit, you would pay Rs 24,720 as tax in the top slab. In the mutual fund, you would pay Rs 1,831 as tax.

https://www.valueresearchonline.com/....asp?str=34452

Another article from Economic Times:

Does it make sense to opt for dividend reinvestment plan?

According to Birani, the dividend reinvestment option doesn't make sense even in debt mutual fund schemes if one is investing for more than three years. Investments in debt mutual funds held over three years would qualify for long-term capital gains tax of 20 per cent with indexation benefit. The inflation-adjusted to purchase cost helps investors to bring down the tax liability considerably.

https://economictimes.indiatimes.com...w/55978153.cms

If you want a concrete example, try this out:

https://www.advisorkhoj.com/mutual-f...s-savings-bank

Be sure to tweak the start date and end date to more than 3 years to see the indexation benefits!


Pradeep

Originally Posted by blorebuddy

Can you please educate on tax on liquid funds if the option is dividend reinvestment? Do we need to pay tax for the dividends received? I heard that in this option there will not be much tax to pay as gains are stripped off and invested as fresh units

[blorebuddy]

Thanks for your reply. This is helpful. However if someone can answer my original question will be helpful.

[pradkumar]

I read this somewhere. I hope that answers your question

Though dividends from debt mutual funds are tax-free for the investor, they are subject to dividend distribution tax which is deducted before distributing the dividend income.

Originally Posted by blorebuddy

Can you please educate on tax on liquid funds if the option is dividend reinvestment? Do we need to pay tax for the dividends received? I heard that in this option there will not be much tax to pay as gains are stripped off and invested as fresh units

[blorebuddy]

Originally Posted by pradkumar

I read this somewhere. I hope that answers your question

Though dividends from debt mutual funds are tax-free for the investor, they are subject to dividend distribution tax which is deducted before distributing the dividend income.

Thanks it helps. So no tax has to be paid by the investor

[srikanthns]

Kindly help me with my query: I have MF Folios in Two fund houses. I put bulk in a liquid fund and do STP to equity funds. After holding the equity funds for more than 3 years and if I systematicall y withdraw money from the equity funds (SWP), will the withdrawn money is taxable? in other words, the money coming to me via SWP, do i have to declare it as an income during that year?

[srvm]

@srikanthns
Long term capital gains (units held for more than 1 year) from equity funds are exempt from tax. However you should declare them in your income tax return under LTCG section in ITR-2 (no tax, just declare)
Hope this helps.

[srikanthns]

Thank you @srvm . I have another query. I know that the proceeds of a house / flat sale, if used to purchase another house /flat, is not attracting tax (That is , the capital gains). Suppose I out the entire proceeds of a sale of house into equity mutual funds, will i be exempted from tax on the capital gains aspect?

[hserus]

Originally Posted by srikanthns

Thank you @srvm . I have another query. I know that the proceeds of a house / flat sale, if used to purchase another house /flat, is not attracting tax (That is , the capital gains). Suppose I out the entire proceeds of a sale of house into equity mutual funds, will i be exempted from tax on the capital gains aspect?

No. Either another house, or specific capital gains bonds u/s 54ec where only the (low!) interest on those bonds is taxable. Those bonds have a 5 year tenor by the way.

[vinit.merchant]

Originally Posted by srikanthns

Thank you @srvm . I have another query. I know that the proceeds of a house / flat sale, if used to purchase another house /flat, is not attracting tax (That is , the capital gains). Suppose I out the entire proceeds of a sale of house into equity mutual funds, will i be exempted from tax on the capital gains aspect?

Originally Posted by hserus

No. Either another house, or specific capital gains bonds u/s 54ec where only the (low!) interest on those bonds is taxable. Those bonds have a 5 year tenor by the way.

As far as I can remember, only the gains portion needs to be reinvested in residential land/house or the bonds for it to be exempt. But do check once since the max period it can be kept in the bonds could be 3 years. I believe 5 years is only when you bought land and are constructing on it, but this I only can remember vaguely.
Rest, you are free to use as you wish and will not attract the tax.

For rest of your queries, what hserus has aptly answered.

[rajatmakar]

Anyone looking at investing in Bharat 22 ETF? I am planning to put in a lump sum for a longer term, say 3-4 years? Any suggestions?

[pradkumar]

https://www.bankbazaar.com/tax/how-c...tal-gains.html

The above link has a good example.

Pradeep

Originally Posted by srikanthns

Thank you @srvm . I have another query. I know that the proceeds of a house / flat sale, if used to purchase another house /flat, is not attracting tax (That is , the capital gains). Suppose I out the entire proceeds of a sale of house into equity mutual funds, will i be exempted from tax on the capital gains aspect?

[vinit.merchant]

Originally Posted by rajatmakar

Anyone looking at investing in Bharat 22 ETF? I am planning to put in a lump sum for a longer term, say 3-4 years? Any suggestions?

I was advised to select some of the multicap funds instead of the Bharat 22.
Was given the following choices instead of Bharat 22 NFO, with a minimum of 3 years holding view.

Aditya Birla Sunlife Equity Fund
Motilal Oswal Focused Multicap 35

[dre@ms]

Has anyone invested in Sovereign Gold Bond Scheme initiated by RBI? Is this a good venture for investment?

Info: http://www.thehindubusinessline.com/...cle9891432.ece

[Sri Vathsa]

Dear All,

I have invested in below ELSS for last 1 year and have got good returns, wanted to invest additional money into below funds (based on some research on money control and other similar sites). Please let me know your opinion

Already Invested in these Funds
Axis Long Term Equity Fund ELSS
DSP Blackrock Tax Saver Fund
Birla Sun life Tax Relief ’96

Planning to invest in the below funds
Tata India Tax Savings Fund - Direct Plan
Invesco India Tax Plan
Reliance Tax Saver Fund - Direct Plan
IDFC Tax Advantage (ELSS) Fund