Hi Shreekanth
I have purchased two MFs- (equity) through SIPs for 12 months very recently. I was not aware that the tax exemption is 0% if the duration is more than a year. Is there any way to avail tax exemption now? would you recommend cancelling the SIP and remaking a fresh one with tenure of greater than 12 months? FYI the funds were icici prudential top 100 (G) and Kotak select focus fund (G). I am aware of elss and tax benefits but can't consider that option as of now.
Thanks.
2 Answers
Hi,
Kindly note that the gains on sale of Equity MF units after 12 months are tax-free. They do not fall under any Tax deduction section.
Where as in ELSS, the investment made under tax saving fund can be claimed u/s 80C as tax deduction.
Kindly read:
Mutual Fund Taxation rules.
Best Equity funds.
How to select right mutual fund scheme?
Dear Sreekanth, thank you for the links it has cleared some doubts. so regarding an sip planned from feb’17 for 12 months, all the gains received by march’19 would be tax free?
also, if the above holds true then this is almost a lock in period of 2 years in case we wish to have a tax waiver. how would you say an ELSS fares in comparison to this which has a lock-in period of 3 years?
Hi,
No. Because the units allotted under each SIP unit need to be held for 12 months , then the long term capital gains on sale of these units are tax-exempt.
In case of SIP in ELSS fund, units allotted under each SIP have lock-in period of 3 years, so automatically they are held for more than 1 year ie 3 years, so LTCG are tax-exempt.
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