[SankalpDesai]

Originally Posted by sgiitk

Two points - one is Sec80C. I will prefer the ppf way since 8% or higher is more or less certain. In the current scenario ELSS can give you a windfall or get you a big loss. I have no hopes till 2014, after that only God knows!

As for MFs I will again avoid Equity. Options can be debt and dynamic PE funds. For debt you can go pure debt/money market (I have IDFC SSIF-MT) or Debt fund with some Equity (DSPML MIP), the current thinking is that Floating Rate Funds may be the most remunerative pure debt funds in the short term. There is another category of Dynamic PE Ratio where I am in the Franklin Templeton Dynamic Ratio FoF. In general a FoF has higher overheads, but the advantage is that the ratio is readjusted once a month. Where we gain is in Long Term capital Gains. In fact all investments in debt instruments should be in Growth mode.

Equity can be in Dividend Payout mode but that may attract a 5% tax in the DTC, while Long Term Capital Gains are likely to continue to be exempt.

The position about the DTC and even the Finance Bill is pretty hazy at the moment so it is difficult to guess what will ultimately happen. The Govt is desperate to get money in any which way, and the Parlaimantary committee looking into DTC headed by Yashwant Sinha (the worst FM of NDA!) also does not give too much hope. Babu mentality prevailing all the way.

Is it really true that the 3 year lock-in period shall remain as is post DTC? Any idea about the E-E-E Tax Treatment on ELSS? I've heard that even after the implementation of DTC, the existing balance of units and resulting holding will be treated as tax-free when redeemed. Please clarify.

[mac187]

Originally Posted by abdriver2000

Dormant only means there were no transactions reported in those folios in last 12 months. You can withdraw your funds anytime.

Thanks for your reply. There hasn't been any transactions in this account for the time I purchased the folios. Since it was a one time ELSS, I didnt anything was needed to be done.

Originally Posted by SankalpDesai

I suppose the issue is due to KYC non-compliance or lack of activity.

This could be a possibility, I used to get letters on KYC, I guessed these were just information letters because nothing specific mentioning the folio number was there in the content. I will get this checked.
Thanks for the pointer.

[sgiitk]

Originally Posted by SankalpDesai

Is it really true that the 3 year lock-in period shall remain as is post DTC? Any idea about the E-E-E Tax Treatment on ELSS? I've heard that even after the implementation of DTC, the existing balance of units and resulting holding will be treated as tax-free when redeemed. Please clarify.

Nobody really can be sure. My guess is that for ELSS the lock-in will remain. As for EEE it is likely to continue, but with dividends taxed at 5%. Given the current mess I have put my 80C (all five accounts of the family) into PPF. Also, once ELSS ceases to be exempt, then the managers may be of a lower quality, so good performance may not be expected. In any case it is likely that Equities may languish till 2014.

I am waiting for the DTC to be seen before starting planning beyond DTC!

[faustus77]

Originally Posted by mac187

I have a query, in 2008 I had invested around 25k in one time ELSS funds. I recently received a mail from CAMS stating that the two accounts have been moved to dormant status. Any idea how I will be able to withdraw these funds?

mac187
Hi
You can also call them on their toll free no,give them your pan card no and folio no and they can guide you.This would be more convenient than visiting them.If necessary they will ask for photocopies of your bank account,pan card no and address proof,all duly signed by you and the 2nd and 3rd holder if any.
Personally,suggest you wait for the market to improve before taking a call to redeem.Unless you would prefer to invest somewhere else.More often than not it has been better to switch out of ELSS and invest in some other scheme.This decision depends on you. And if the MF house managing it has a good track record.
Regards

[S_U_N]

Originally Posted by akj123

As per my understanding, we can invest max 1L in PPF across our account and our kids account. That is, there is no separate 1L available for kids account. So the max a family of dad + mom + N kids can invest is Rs 2L per year.

I don't think that there is a restriction of 2 lacs per family.
If you have four members in family (including two kids), then you can invest 1 lac x 4 = 4 lacs. The interest earned on the entire amount of 4 lacs is tax free. However 80C benefit is only on 1 lac out of the 4 lac.

Timing is tricky - but it seems that markets are comparatively on lower side than higher. There is certainly chance of them dropping based on conditions in Eurozone and our own "policy paralysis", but seen historically they are not very expensive right now. Please read through this recent excellent article by Prashant Jain (one of our must successful MF managers):

It's tomorrow that matters: Prashant Jain

I will go through this one.

[mac187]

Originally Posted by faustus77

Personally,suggest you wait for the market to improve before taking a call to redeem.

Thanks for the suggestion, I would try that first.

Regarding withdrawing, I was under the impression that once the account is dormant the NAV is locked and doesn't get affected by the market changes. Correct me if I am wrong.

[sgiitk]

Originally Posted by mac187

....I was under the impression that once the account is dormant the NAV is locked and doesn't get affected by the market changes. Correct me if I am wrong.

No the NAV still changes. I have a whole lot of dormant Folios but the valuations do change. Before you ask me why, these were in my and my wife's names. Now I have opened fresh ones adding our son's name. So the old one will eventually be sold out whenever I need the cash.

[akj123]

Originally Posted by S_U_N

I don't think that there is a restriction of 2 lacs per family.
If you have four members in family (including two kids), then you can invest 1 lac x 4 = 4 lacs. The interest earned on the entire amount of 4 lacs is tax free. However 80C benefit is only on 1 lac out of the 4 lac.

I have found some links which corroborate what i was saying, please have a look.

From Public Provident Fund, Point #26:

The ceiling on deposits as provided for by Central Government from time to time, which is Rs.1,00,000/- in a financial year at present, is both for individual self account and account(s) opened on behalf of minor(s) of whom he is the guardian, taken together.

From http://www.livemint.com/2012/05/0721...can-open.html:

You can open a second PPF account in the name of your minor child. However, the total contribution in both the accounts cannot exceed Rs. 1 lakh.

Maybe your local branch is allowing to deposit 1L in each account, but i feel that's risky (if they check later they may return the extra principal without interest).

[sgiitk]

As far as I know for PPF they are indexing on the PAN. So multiple accounts with the same PAN are permitted but the total contribution in any year cannot exceed 1L. What you are doing may result in censure, penalty or even confiscation of the money. With indexation on PAN it WILL be caught out at some point.

[S_U_N]

Originally Posted by akj123

I have found some links which corroborate what i was saying, please have a look.

@akj123: Thanks for these links. I have gone through them and also trying to consult a couple of Charted Accountants. I will get confirmation from them soon.

I am surprised that SBI has allowed us to put in money for both my account and my child's account at the same time (exceeding 1 lac limit).
Plus they have also given interest on the amount.

[sgiitk]

Originally Posted by S_U_N

I am surprised that SBI has allowed us to put in money for both my account and my child's account at the same time (exceeding 1 lac limit).
Plus they have also given interest on the amount.

I am wondering whether this is another red herring, like the one about only three extensions being permitted in a PPF account. I still hear it from time to time.

I may add that with centralised account keeping, if this is being allowed, then it could just turn out to be another myth. The SBI (or all banks for this matter) hold the PPF accounts on trust, and get a commission on them. The money goes to the treasury!

[S_U_N]

Originally Posted by sgiitk

I am wondering whether this is another red herring, like the one about only three extensions being permitted in a PPF account. I still hear it from time to time.

The same bank/ branch has informed my father that this is his last 5 year extension for PPF. This is his third extension and he cannot go for the fourth term.

[sgiitk]

Originally Posted by S_U_N

The same bank/ branch has informed my father that this is his last 5 year extension for PPF. This is his third extension and he cannot go for the fourth term.

Just check the SBI site. It now states unequivocal that the PPF can be extended indefinitely. Then take a printout and shoot the joker.

They should at least trust their own site. My own PPF is running since 1978,with SBI!

Iam currently out of town or else I will have sent you a scan of a very old article by Shanbagh. I should be able to do so when I get back to Kanpur in mid-July. Please PM me with your e-mail id.

[S_U_N]

Originally Posted by sgiitk

Just check the SBI site. It now states unequivocal that the PPF can be extended indefinitely. Then take a printout and shoot the joker.

They should at least trust their own site. My own PPF is running since 1978,with SBI!

Iam currently out of town or else I will have sent you a scan of a very old article by Shanbagh. I should be able to do so when I get back to Kanpur in mid-July. Please PM me with your e-mail id.

I am trying to locate that on the SBI website, but I haven't been able to find anything so far. There is a lot of conflicting information on various tax sites as well.

I will send you a PM.
Thank you for your support.

[akj123]

Originally Posted by S_U_N

I am trying to locate that on the SBI website, but I haven't been able to find anything so far. There is a lot of conflicting information on various tax sites as well.

The PPF info is there on SBI site, but the link is generic so pasting the path is useless

The way i found it was to go to :: STATE BANK OF INDIA :: Safe Banking With SBI ::, and typed "PPF" in the "Search SBI site" button at top of page. It will take you to the PPF page.

It says:
Duration
- 15 years
- Can be extended for one or more blocks of 5 years


Since it says "one or more", we can argue it's infinite number of extensions