Impact of LTCG Tax on Equity Mutual Funds

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What is the budget proposal of LTCG (long-term capital gains) tax on equity mutual funds?

Till now, investors, who invested in equity mutual funds and sold them after holding them for more than a year, paid zero LTCG tax. In this year's budget, the government has proposed a 10% LTCG tax on gains made above ₹1 lakh per annum.

The budget talks about grandfathering in LTCG. What does that mean?

The grandfathering clause is the exemption granted to existing investors for gains made by them before the new tax law came into force. The government has done this to ensure that investors who have committed money keeping in mind the easier tax regime are protected. As per the new laws, the government has said that gains made in equity-oriented mutual fund schemes till January 31, will be grandfathered or exempted. There will be no LTCG tax on notional profits on mutual funds till then.

Who will come under the new LTCG tax net? When is the tax payable?

Since this is a direct tax proposal, it will normally be applicable for the assessment year 2019-20 (Financial Year 2018-19). In other words, the LTCG of over Rs 1 Lakh made during the year 2018-19 will be liable to tax at 10%.

What happens to my tax liability if I sell equity-oriented mutual funds starting today held for more than a year?

For long-term capital gains made in the current financial year (2017-18), i.e. sale of funds upto March 31, 2018, there is not tax. However, any sale made after April 1, 2018 will be liable to the new LTCG tax. One needs to segregate this LT capital gain into two parts:

a) Part I – is LTCG made upto Jan 31, 2018. This will be the NAV of the mutual fund on Jan 31, 2018, minus the cost of acquiring the units;

b) Part II – is LTCG made after Jan 31, 2018. This will be sale price NAV minus NAV of the scheme as on January 31, 2018.

As per the tax law, Part I will be exempt. It is the Part II, which will be assessed as LTCG for Tax.

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SIP in Smallcap Funds

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In a small-cap fund always invest through an SIP. Never invest a lumpsum amount. They are more volatile and move wildly. In fact, even the fund managers get scared of the market at times. They are not finding enough opportunities in small-cap. Many small-cap funds have stopped taking a lumpsum amount.

Undoubtedly, markets look extremely optimistic and there could be a correction. But don't stop your SIP and wait for correction. Because if you get lucky with the correction, it will be extremely difficult for you to get in again. It is very difficult to catch the bottom and catch the peak. So, continue with your SIP. If the market corrects, maybe increase the amount of your SIP.

The simple way of investing in a market is to buying low and selling high. But it is a very hard thing to do. How do you actually wait for the time and spot when it is at the bottom or at the peak? The middle path is that be regular about it. You will end up catching too many highs and lows but time will take care of it. So, continue with your SIP and invest only through an SIP in small-cap.

Invest Rs 1,50,000 and Save Tax up to Rs 46,350 under Section 80C. Get Great Returns by Investing in Top Performing Tax Saving ELSS Funds. Save Tax Get Rich

Top 10 Tax Saving Mutual Funds of 2018

Best 10 ELSS Mutual Funds to Invest in India of 2018

1. Tata India Tax Savings Fund 

2. Mirae Asset Tax Saver Fund

3. DSP BlackRock Tax Saver Fund

4. Sundaram Diversified Equity Fund

5. Birla Sun Life Tax Relief 96

6. ICICI Prudential Long Term Equity Fund

7. Invesco India Tax Plan

8. Reliance Tax Saver (ELSS) Fund

9. Axis Tax Saver Fund

10. BNP Paribas Long Term Equity Fund

Invest in Best Performing Tax Saver Mutual Funds of 2018

Invest Best Tax Saver Mutual Funds Online

Download Top Tax Saver Mutual Funds Application Forms

For further information contact SaveTaxGetRich on 94 8300 8300

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All EPF withdrawals by online only from April 1

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Beginning April 1, only online applications seeking withdrawals from Employees' Provident Fund Organisation (EPFO) accounts by members will be entertained.

According to a press release from the EPFO, Madurai Region, as a part of a national initiative, it had been proposed to go paperless from August 15 across all EPF offices. Towards this end, EPF officials had conducted a number of workshops and sensitised members and their organisations to go online.

Already, the EPFO here has started receiving applications online, which are being processed by officers. "In the event of furnishing all required details, a subscriber will get his contribution credited in the bank account within three working days," the press release said.

The applicants shall access the unified portal which will seek information pertaining to the member. After filling up basic details such as name, date of birth, age, father's name, bank account, Aadhaar number and the UAN number, the application is sent to the EPFO, from where the process of repayment will begin. Any application, which seeks more than ₹10 lakh withdrawal, should be filed online. However, it would not be applicable to those seeking pension (Form 10D) and for those applying for legal heir purpose.

Regional PF Commissioner II S. Sankaralingam said employees should be sensitised to save their money in the EPF accounts to be withdrawn at the time of superannuation. Non-withdrawal would enable them to avail themselves of higher credit limits for home loan and other purposes. The employers had a responsibility to disseminate the merits of withdrawal at the time of retirement only to their employees.

SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

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Financial Risks during Retirement

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The risk of living longer than estimated and running out of retirement funds. This is called longevity risk. 

Underestimating the effects of inflation on expenses through the retirement period is one of the biggest challenges of retirement planning. 

Ignoring the effects of aging and not adequately planning for expenses related to health can deplete your retirement corpus. 

If not planned well, fall in annuity rate and interest rates will lead to low income through retirement and cause huge stress on retirement corpus. 

Unplanned withdrawal from the accumulated corpus at an early stage of retirement may result in shortfall in the later stages. 

SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich

For further information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

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Best way to Invest SIP Mutual Funds

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The best way to do a SIP in a mutual fund is to link it to a tangible, well defined financial goal. This simple act will ensure that your SIP continues for long enough to compound and create value. You can also select the exact date to start and stop an SIP while filling up your mutual fund investment documents instead of selecting the predetermined date or perpetual mode.

The process of linking your SIP's to your financial goals ensures that you automatically invest in an asset class that's appropriately suited to your time horizon. Additionally, it's important to not try and 'time' your SIP investments, but rather let the markets take their own course by allowing your SIP instalments to get debited in a disciplined manner. In doing so, you'll end up benefiting from the inevitable ups and downs of the markets

Invest Rs 1,50,000 and Save Tax up to Rs 46,350 under Section 80C. Get Great Returns by Investing in Top Performing Tax Saving ELSS Funds. Save Tax Get Rich

Top 10 Tax Saving Mutual Funds of 2018

Best 10 ELSS Mutual Funds to Invest in India of 2018

1. Tata India Tax Savings Fund 

2. Mirae Asset Tax Saver Fund

3. DSP BlackRock Tax Saver Fund

4. Sundaram Diversified Equity Fund

5. Birla Sun Life Tax Relief 96

6. ICICI Prudential Long Term Equity Fund

7. Invesco India Tax Plan

8. Reliance Tax Saver (ELSS) Fund

9. Axis Tax Saver Fund

10. BNP Paribas Long Term Equity Fund

Invest in Best Performing Tax Saver Mutual Funds of 2018

Invest Best Tax Saver Mutual Funds Online

Download Top Tax Saver Mutual Funds Application Forms

For further information contact SaveTaxGetRich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

OR

Call us on 94 8300 8300

Grandfathering in LTCG

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The grandfathering clause is the exemption granted to existing investors for gains made by them before the new tax law came into force. The government has done this to ensure that investors who have committed money keeping in mind the easier tax regime are protected. As per the new laws, the government has said that gains made in equity-oriented mutual fund schemes till January 31, will be grandfathered or exempted. There will be no LTCG tax on notional profits on mutual funds till then.

SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich

For further information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

Risk in Mutual Funds

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Risk is inherent to investing. Investments vary across the risk spectrum, but there is hardly any investment that's entirely risk-free. Mutual funds also carry risk. But first, what is 'risk'? In the world of investments, risk is the other name for volatility or fluctuation in price. An investment that is susceptible to wild swings in either direction is considered to be highly risky. Both equity funds and debt funds carry risk. Comparatively, debt funds are generally not as risky as equity funds. Equity tends to be volatile, especially in the short to medium term.

In order to judge the inherent risk in mutual funds, the most basic tool is the riskometer. All mutual fund schemes carry a riskometer which points at the inherent risk in the scheme. The figure alongside shows a mutual fund riskometer.

More specifically, here is how various equity funds stand in the increasing order of their risk grade:

Balanced funds are the least risky as they can invest as much as 35 per cent of their assets in debt. Since large companies don't fluctuate wildly, they come next. Mid and small caps are notorious for their crazy moves, so the funds investing in them appear at the second-last position. Finally, since thematic and sectoral funds take highly theme-specific bets, they are the riskiest of all.

Here is how debt funds stand in the increasing order of their risk grade:

Liquid funds < Ultra short-term funds < Short-term funds < Income funds, credit-opportunities funds, dynamic-bond funds, long-term gilt funds

With debt funds, the risks are two fold: interest risk and credit risk.

Interest risk means that interest rates may move up or down unexpectedly. A rise in interest rates results in a decline in bond prices and vice-versa. So, a fund that holds long-duration bonds is subject to high risk.

Credit risk is the risk of default by the bond issuer. Debt funds that invest in relatively lower-rated paper carry this risk.

There are other risks also in mutual funds, which the investor can minimise by making prudent decisions. By investing across multiple fund houses and schemes, one can reduce the fund-house-specific, fund-manager specific and scheme-specific risk. Also, by sticking to multi-cap equity funds one can reduce the portfolio risk.

SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com