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Since 1st March, 1999
 
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Q&A
SIP--save
I wish to invest in ELSS and diversified equity mutual funds through a systematic investment plan. How long should I continue to invest in each type of fund? When can I redeem the units to get a 20 per cent to 30 per cent return?
Bimal Mukherjee, Khidderpore
 
Investment in an ELSS will be locked in for three years. If you follow the SIP route to invest in an ELSS, you cannot redeem the units purchased at each SIP instalment before three years of holding those units. Suppose you start an SIP in an ELSS on December 22, 2007, you cannot sell the units bought with the first instalment before December 21, 2010. You can opt for a one-year SIP, two-year SIP or three-year SIP. However, in case of an open-ended diversified equity scheme, you can sell your units as and when you want. If you sell them before 12 months from the purchase date, you will have to pay a short term capital gains tax of 10 per cent. If it is more than 12 months, you don’t have to pay any tax. The return from your investment will depend on the market and performance of the fund.
 
 
 
Interest income
My father died on November 6 last year. He last filed income tax returns as a senior citizen and had income from interest on deposits only. Now that interest income will accrue to my mother and me. Do we have to file returns ?
Avijit Sinha, Shyamnagar
 
If your annual income, including the interest from your father’s deposits, does not exceed the basic income limit for tax exemption, you don’t have to file returns. You can simply submit Form 15G with the bank where the deposits are at the beginning of a financial year and claim non deduction of tax at source. But if your annual income, including the interest component, exceeds the threshold limit, you will have to file returns.
 
 
Tax on Ulip
I had invested Rs 12,000 per annum in the 10-year unit-linked insurance plan of UTI. The first instalment was paid in March 1996 and the last in March 2005. The scheme matured in March 2006. Will there be any capital gains tax on withdrawal now?
Sunita Guha, Khardaha
 
This was the first unit-linked insurance scheme in the country. Being an insurance scheme, the withdrawals on maturity are tax-exempt. There will be no capital gains tax.
 
 
If you have any queries about investing or taxes or a high-cost purchase you are planning, mail to: btgraph@abpmail.com, or write to: Business Telegraph, 6 Prafulla Sarkar Street, Calcutta 700 001.
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