Save Tax – Equity

POSTED BY Kapil ON May 28, 2012 9:42 am COMMENTS (7)

My objective is to save tax and at the same time invest in equity. Can you suggest me options?

1. ELSS
But, I understand, most probably, it will not save tax from next year. Hence my questions?
a. I would like to first get the clarity on 3 yrs lock-in. I believe, it means that I cannot redeem my units prior to 3 yrs. However, I do not need to pump-in my funds for 3 consecutive yrs. For eg, if I start a SIP and continue it for first 6 months and then stop the SIP, I would still enjoy the tax benefits. Pls. let me know if my understanding is correct?
b. Since, it has 3 yrs lock-in, what would be the impact on ELSS after one year, assuming that by then they’ll not continue to save tax. My hunch, is that people will start redeeming them (whose lock-in period has already been passed) and would then impact fund manager decision making based on the reducing AUM of the fund. Or at the very least, people will avoid to pump more funds into them, as there are many other equity schemes which have done well over ELSS funds. Pls. guide.

2. Rajiv Gandhi Scheme – which has been recently introduced. I think, once it is tied to the mutual funds, as suggested by SEBI, then only it’ll be a good instrument. Till then, I personally would like to stay away. Is there anybody here who is investing in it?

3. ULIPs – I would never buy them.

4. What else? Any suggestions?

Thanks.
Kapil.

7 replies on this article “Save Tax – Equity”

  1. Kapil says:

    Can I get more responses on this? It would be great if I can get suggestions on the ELSS front.

    1. Dear Kapil, Regarding the ELSS & their fate under DTC, I’m not going to offer any comment for the simple fact that DTC is yet to be passed out as an ACT from Parliament.

      Thanks

      Ashal

  2. Kapil says:

    Thanks for the comments.

    So what’s the final word? Should one start investment in ELSS today taking into account the DTC, and henceforth, its impacts?

    1. Dear Kapil, to invest or not to invest in ELSS ‘ll be a personal choice. By the way, if you decide to invest in ELSS I w’d ask you to do not spread your SIPS for all over the year, instead invest the money in next 2-3 months. The reason is, lock-in period for each individual investment is 3Y.

      Thanks

      Ashal

      1. Kapil says:

        Thanks for your comment Ashal. Can you provide your opinion on investing in ELSS this year? What do you think will be the impact once DTC is rolled out?

  3. Ramesh says:

    If the ELSS stops, Ulips will be the only real option for equity + tax saving.

  4. Dear Kapil, Please do not anticipate things as of now. Regarding that ELSS not available from next FY, my dear friend, if & only if DTC comes into implementation from next year & that too in the same wordings as proposed on June 2012, then only you reason to worry.

    In my opinion, there are many slip between the cups & your lips. Let DTC happen first. Regarding your queries, I’m trying to answer these one by one.

    Be it SIP or one time, investment, it is available for tax benefit immediately. No need to continue pumping regularly unlike life insurance prems.

    For those persons, whose lock-in period is already over, there is no pressing need to redeem so it may not be that all such persons ‘ll redeem in one day or immediately. Please do try to understand, after the lock-in period is over, your ELSS is just like any other ordinary Eq. fund.

    Rajiv Gandhi Eq. Scheme – well let it happen first then only it’s any worth of discussion.

    Ulip – already said a lot about these

    Any other option – Yes NPS is there as an option but in it’s current avatar I’m not going to invest my own money.

    Thanks

    Ashal

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