Hi Sreekanth,
I am so impressed with your blogs and advise but sad to know that you don't provide personal financial consultancy services.
I am an NRI of 35 years age working outside India on employment VISA. I am married and have 2 children of age 8 and 2. I have my own house. Apart from this I don't have any investments.
Better late then never, I wants to start investing monthly 20000 to 30000 or more in Mutual funds or other options. I don't file Income tax returns as I don't have any income source in India. I have a NRI account with bank.
I understand that Equity funds are tax free after a certain period of time.
QUESTIONS:
- Please confirm if I invest in Equity funds and sell it after long duration (5 years or more) Will there be any tax ?
- Will the Mutual company deduct TDS when i will sell the funds ?
- How the company knows that the units I m selling was purchased 5 years back and not last month (considering i m buying funds every month via SIP) ?
- Also do i need to file Income tax return in that year ?
- Suggest suitable investment profile using below info: Aggressive Time horizon - 12-15 years Fund type - Growth Monthly Investment - 20000 to 30000
3 Answers
Dear Imran,
I used to provide one-to-one FP services, till 2014. But, by concentrating only on Blogging now I am able to reach more friends/blog readers. I am glad that I took the right decision to drop one-to-one service and opt for full-time blogging.
Kindly share few details;
- Is your spouse an earning member of your family?
- Do you have any other family member(s) who are financially dependent on you?
- Do you have life insurance cover?
- How about health cover for self and dependents?
- Have you given your own house on rent? Do you get any rental income?
- No taxes applicable. Read : MF Taxation rules for Resident Indians & NRIs.
- Kindly read above article.
- The onus of calculating the tax liability & paying the taxes (if any) lies on you (investor). For ex: If you sell units of an equity fund within 12 months, taxes on Short Term Capital Gains are applicable. Most of the online platforms do provide Capital Gain statement to its investors/clients.
- If tax liability is there, yes.
- Kindly read this article : List of important articles on Personal Financial planning
Thanks for the prompt response.
I read the suggested NRI taxation article and understood that if I hold the fund for more than 1 year there is no tax. But am confused with the TDS clause for Short term gain. My query is For ex: I bought 10 units of MF every month via SIP and after 2 years i want to sell the units bought in 1st year (i.e 120 [10X12] out of 240 accumulated units ) how the MF company will understand that this 120 units are old units and not the one bought this year.
I have provided the required information below. Please suggest me suitable allocation to invest 20000 in some goods MF's as an starter ?
Imran.
- My Spouse is not earning. I am the only bread winner.
- I have total 4 dependents - Wife, 2 Kids and Mother.
- No Life Insurance cover
- Health cover is provided by my company for all except my mother. So my mother does not have a health insurance. She if 65 years old.
- I have not given house on rent. So no rental incomes.
Imran.
Hi,
1 - The company will redeem your units. The logic here is 'FIRST IN FIRST OUT' method. The investor has to calculate the capital gains (STCG/LTCG) and pay necessary taxes. This is can be tough task for an investor to do, so most of the online brokerage platforms do provide the Capital Gain statements based on which an investor can analyze the tax liability.
2- As of now, your high priority task is to get adequate life insurance cover. Also, buy a stand-alone personal accident cover.
Read:
- If life is unpredictable, insurance can't be optional.
- Best Term insurance plans.
- Best Personal Accident insurance plans.
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