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Mohit Agarwal: I have sold a property worth `50 lakh and invested part of the proceeds in equities. Do I have to buy another property to save capital gains tax or is there any other way out? Also, what will be the tax implication?
Chetan Chandak, Head of Tax Research, H&R Block India, replies:
Assuming you have sold an immovable property and held it for more than two years before the sale, you can claim tax exemption as stated below.
Exemption u/s 54 is available if you sell a residential house and reinvest the capital gains to purchase/construct a new residential property in India. It should be done within two years, in case of a purchase, and within three years, in case of construction, from the date of sale. You can also claim exemption for any residential house purchased within a period of one year before the sale of the old one.
Exemption u/s 54F is available if you sold any property (other than a residential house) and invested the net sales proceeds to purchase/construct a new residential house in India. Once again, it should be done within two years, in case of a purchase, and within three years, in case of construction, from the date of sale. If you are not investing the entire sales proceeds, tax exemption will be allowed based on the amount invested. If you already own more than one house on the date of sale (other than the one sold by you), you will not be eligible for tax benefit.
To claim exemption u/s 54EC, invest your capital gains in specified bonds (NHAI/REC) within six months from the date of sale of any long-term capital asset. Maximum tax exemption available is `50 lakh.
If you are not able to invest the entire amount for purchasing/constructing the residential house (as mentioned under sections 54 and 54F) before filing your tax returns (July 31, following the financial year when you sold your property), deposit the unutilised amount in Capital Gains Account Scheme to get tax exemption.
Capital gains on the sale of a long-term property are taxed at 20 per cent post indexation and after adjusting above-listed exemptions. On the contrary, short-term capital gain will be added to your taxable income and taxed as per the slab rate applicable to you.
Ayush Balodiya: I am a 23-year-old salaried professional, and my take-home income is `20,000 a month after tax deduction. Since September 2017, I have been investing `1,000 a month in an equity mutual fund called Mirae Asset Emerging Bluechip Fund. I am looking to create a corpus of `1,000 crore. What should I do?
Ashish Shanker, Head, Investment Advisory, Motilal Oswal Private Wealth Management, replies:
When setting up a financial target, one must ensure there is a purpose behind it, and one has adequate time and resources to achieve that. If the target is unrealistic, it can leave the pursuer frustrated and may cause one to give up when it does not seem achievable. You have time on your side, but you must set up realistic targets to achieve your goals such as buying a house, marriage, bringing up children, starting a business, travel and retirement.
The current SIP of `1,000 is not sufficient to achieve significant financial goals. Assuming that a total SIP of `10,000 will be invested every month in a diversified basket of three to five mutual funds (equity 75 per cent and debt 25 per cent), a corpus of `6-7 crore can be generated by the time you retire. Any increase in salary can also be invested to grow the corpus. On the equity side, we recommend Kotak Select Focus Fund Regular-Growth, Aditya Birla Sun Life Top 100 Fund-Growth, Motilal Oswal MOSt Focused Multicap 35 Fund and HDFC Balanced Fund. On the debt side, you can opt for Aditya Birla Sun Life Short Term Fund and Franklin India Short Term Income Plan.
Ritika Mahajan: I am 32-year-old, and I want to invest `20,000 per month in SIP for 10-15 years. What should be the fund types and in how many funds should I invest?
Vidya Bala, Head of Mutual Fund Research, FundsIndia, replies:
You may invest in three-four funds for your SIP. Considering your age and the time frame, a 70:30 equity:debt portfolio should do a good job of building wealth. A large-cap fund, a mid-cap fund, a balanced fund and a debt-income fund should provide you with the right balance, reducing volatility and also generating superior returns. Stick to the funds with consistent track records instead of going for those which clocked chart-topping performances over the past one year.
Rishabh Sharma: I have lost my brother. How can I withdraw his PF?
Vikash Jain, Co-founder, ShareSamadhan, replies:
Only the nominee who is chosen by the deceased employee (at the time of creating his PF account) can apply for PF withdrawal. If the deceased did not nominate anyone at the time, an immediate family member or legal heir/s should submit claims for PF and pension money. The claim can be made by filling in the new Composite Claim Form, or CCF, which has replaced all existing UAN or non-UAN-based claim forms such as Form 19, Form 10C and Form 31. If he does not have a nominee, his legal heir/s will get his full and final PF settlement, pension and employee deposit-linked insurance benefit.