I am invested in Fidelity Equity, Franklin Flexicap and Reliance Tax Saver via SIPs. Should I continue?
ASHISH S. NICHANI
Your scheme selection can be better in terms of returns. If short-term capital gains are not applicable (that is, you have held the units for more than one year), you must consider reallocating funds as these schemes have been underperforming their peers. For better performing schemes, you can make your selection from the large-cap, diversified equity and equity-linked saving scheme (ELSS) categories from the OLM50 basket to replace what you have now.
Please give me your opinion on my portfolio composition. I have invested through SIPs in these funds: SBI Magnum Contra (G) for five years, DSP Merrill Lynch Equity (G) for five years, Reliance Growth (G) for five years, Tata Infrastructure (G) for three years, Reliance Diversified Power Sector Fund (G) for five years and a one-time investment of Rs20,000 in SBI Magnum Taxgain (G).
Your selection of schemes has indeed been very good and leaves little room for improvement. You should consider making your equity-linked saving scheme (ELSS) investment also through an SIP. Add an aggressive ELSS, such as a Birla Sun Life Tax Relief 96, to your portfolio and split the ELSS investment between the two schemes. The next step in the investment process would be to track your schemes and rebalance your portfolio wherever the need arises so that the assets are allocated according to your specific needs.
I have a considerable mutual fund portfolio, but unlike my stock portfolio, that can be sold through a broker in less than five minutes should I need the money, the mutual fund portfolio requires logging on to various fund sites and placing orders to sell. Also, registering on such sites is a pain; it requires paperwork and the process takes almost a month. Do we have any consolidated service provider in India where I can directly buy/sell mutual funds? I don’t mind paying 2.25% for this benefit.
The mutual fund distributor through whom you had made your investment should be willing to help you with the paperwork involved in redeeming your schemes. If this is not feasible, you can register yourself with an online distributor such as ICICI Direct or Kotak Securities, among others, and use their online facility. You can convert your existing holdings into electronic form under your account with the service provider and conduct future purchase and redemption transactions through them. However, you need to evaluate the prerequisites that may be laid down and the costs between the various providers before you decide on the one that best meets your requirements.
I have not got my fresh dividend warrant which was sent for revalidation to the registrar of a mutual fund house two years ago. There has been no response from them, even though I submitted all necessary documents, including the expired dividend warrant and indemnity bond. What should I do? Should I complain to Sebi or Amfi?
ANIL K. SRIVASTAVA
We assume that you have been communicating with the mutual fund and the registrar and transfer (R&T) agent in the intervening period. Please register a complaint with the Securities and Exchange Board of India (Sebi), enclosing all relevant documents, including copies of any communication. There is an investor grievance format in which the complaint can be registered. This is available on Sebi’s website, ‘www.sebi.gov.in’. The complaint can either be submitted online or to Sebi’s address: Sebi, C-4A, G Block, Bandra Kurla Complex, Bandra East, Mumbai-51.
Can service tax paid be deducted from income tax?
Service tax as such cannot be deducted from the income tax payable. However, the entire cost of any service availed for the purpose of business, including the service tax paid, is considered a deductible expense while computing the income under the head income from business or profession.
A flat I am planning to buy will be the first house in my name. After how many years should I sell it to minimize the capital gains tax? If I buy a house jointly with my wife, a housewife, will I get relief on the capital gains tax at the time of sale?
If you sell any capital asset other than shares and securities after holding it for three years or more, any gain is classified as long-term capital gain (LTCG) which attracts a concessional rate of tax. Therefore, if possible, you should hold the flat for at least three years. LTCG is taxed at a flat rate of 20% after the cost of acquisition is adjusted for inflation. Further, if you use the capital gain from selling the house to purchase another house property within one year prior to the date of sale or within two years of that date, or construct a house property within three years of the sale, you save the tax altogether. Alternatively, you can invest the gain in capital gains tax saving bonds to save the tax. As far as jointly buying a property is concerned, co-owners get tax benefits individually in the proportion of their contribution towards purchasing the property. In your case, where the joint owners will be husband and wife, you will have to invest pro rata to a percentage of ownership. If your wife does not have her own income for investing in the property, any gain from its sale will be taxed in your hands, irrespective of the percentage of the property she owns.
My income consists mainly of my salary and interest earned from fixed deposits. My wife runs a small parlour from our home and earns around Rs3 lakh per annum. In which ITR forms are we required to file our returns? If we take a joint home loan, what exemptions will we get individually in our returns on that score?
As you have only salary income and income from deposits, you will have to file your tax return in form ITR-1. Your wife, as she is getting business income from parlour work, will have to file her return in form ITR-4. If a couple wants to avail tax benefits for a home loan taken jointly, as in your case, they will have to make investment pro rata to a percentage of ownership. You can claim deduction up to Rs1.5 lakh (individually) under the head “Income from house property” for interest on a home loan in the ratio of ownership, but only if the house is self-occupied. If the property is let out, there is no ceiling on the deduction that can be claimed for interest payment of a home loan. In addition, each of you can also claim deduction up to Rs1 lakh for repayment of the principal amount of the loan.
I am a senior citizen. Until last year, my income was around Rs2.50 lakh. I gifted some fixed deposits to my married daughter this year and now I will get an annual income of Rs2.20 lakh. Am I liable to file my return now?
Annual income up to Rs1.95 lakh was exempt from income tax for people aged 65 or above for the financial year 2007-08. From this financial year, that is, 2008-09, this threshold limit has been increased to Rs2.25 lakh. As your income is below this basic exemption limit, it is not mandatory for you to file your return of income. If you have filed returns for years, you may continue the practice—people with an income below the taxable limit are not restricted from filing the return. The likelihood of changes in income and the basic tax exemption limits every year also makes it better to keep filing returns.
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