Should I mMove from equity funds to ELSS for tax saving ?

POSTED BY caref ON August 11, 2014 1:27 pm COMMENTS (6)

Hi Friends,

with the increased 80c investments, does it make sense to redeem some equity funds from portfolio and invest in ELSS. for example, I redeem from an equity fund say Franklin bluechip (investing from last 3 years) and invest in a good large cap based ELSS where I get equity based returns as well as tax exemption. please advise.

6 replies on this article “Should I mMove from equity funds to ELSS for tax saving ?”

  1. Hemanth Chandra says:

    What is the benefit that you will get if you redeem from franklin bluechip and invest in some ELSS ??

    1. caref says:

      I don’t have extra money to take care of extra investment under 80c. So, I can redeem from this fund and invest into a large cap based elss fund so I can avail tax benefits as well as my equity investment continues. does this make sense?

      1. Hemanth Chandra says:

        Why did you invest in Franklin blue chip fund ? Any goal attached to it ?

        1. caref says:

          yeah its part of my long term investment towards retirement for next 10 years +.

          1. Hemanth Chandra says:

            You have an income of Rs.100 for the FY. So, you have to pay tax on this income.

            Now, you redeem your equity fund of Rs. 10 and this is not taxable as you have invested in this fund for more than 1 year. Now you will invest this Rs.10 in an ELSS….

            But, your income for the FY is still Rs.100 on which still you have to pay tax….. So, your taxable income didn’t change at all….

            Do I make sense ?

            1. caref says:

              but if my income is 100 rs . say 80c limit is 10 rs . my taxable income is 90(100-10) . now 80c limit is increased to 15rs so my taxable income is 85(100-15). this is what i want to utilise by investing in ELSS fund to take care of the 80c limit from 1lack to 1.5 lakhs.

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