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If you have been investing in Equity Linked Savings Schemes (ELSS) for more than three years, your units would be available for redemption. Your investments may have saved tax on ELSS mutual funds<\/strong>, but their redemption is not tax-free.<\/p>\n\n\n\n After the Budget 2024 proposals, Long-Term Capital Gain (LTCG) tax on redemption of equity funds has changed, as has the threshold. Income tax on ELSS mutual funds<\/strong> now attract 12.5% in LTCG, instead of 10%. However, the good news is that the exemption limit has increased by Rs. 25,000 from Rs. 1 lakh per annum.<\/p>\n\n\n\n In view of these amendments, let\u2019s explore ELSS taxation <\/strong>so you can plan your redemption wisely.<\/p>\n\n\n\n While ELSS helps you save tax at the time of investment, it\u2019s equally important to understand how taxation applies when you redeem your units.<\/p>\n\n\n\n As per the Income Tax Act, gains from equity-oriented investments held for more than one year are considered Long-Term Capital Gains (LTCG). Because ELSS invests primarily in stocks and you can only redeem after three years, all the profits naturally qualify as long-term.<\/p>\n\n\n\n According to the Finance (No. 2) Act, 2024,<\/p>\n\n\n\n Let\u2019s understand this with an example.<\/p>\n\n\n\n Suppose you invest Rs. 3 lakh in an ELSS in FY 2024-25. Fast forward three years, and your investment has grown to Rs. 4.5 lakh in FY 2027-28.<\/p>\n\n\n\n Here\u2019s how the calculation of tax on ELSS mutual funds<\/strong> works:<\/p>\n\n\n\n <\/p>\n\n\n\n Here\u2019s where ELSS gives you room to be strategic. Since the Rs. 1.25 lakh exemption is yearly, you can plan redemptions in phases. For instance, if you have Rs. 2 lakh in gains, redeem Rs. 1 lakh this year and Rs. 1 lakh next year. This way, you might not have to pay any ELSS capital gain tax<\/strong>.<\/p>\n\n\n\n To plan your ELSS redemptions smartly, you must understand a few key points about how LTCG is calculated and taxed.<\/p>\n\n\n\n ELSS funds not only help you save tax but also grow your wealth over time. The key is to plan your withdrawals smartly so you minimize tax on ELSS mutual funds<\/strong> and make the most of your returns. Start investing in ELSS today with Tata Capital Moneyfy website or Moneyfy app to explore funds, try smart calculators, and begin your investment journey today.<\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" If you have been investing in Equity Linked Savings Schemes (ELSS) for more than three years, your units would be available for redemption. Your investments may have saved tax on ELSS mutual funds, but their redemption is not tax-free. After the Budget 2024 proposals, Long-Term Capital Gain (LTCG) tax on redemption of equity funds has […]<\/p>\n","protected":false},"author":1,"featured_media":38962,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[62],"tags":[],"yoast_head":"\nPayable tax on ELSS mutual funds during redemption<\/strong><\/h2>\n\n\n\n
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Calculation of capital gain tax on ELSS<\/strong><\/h2>\n\n\n\n
Particulars<\/strong><\/td> Amount (Rs.)<\/strong><\/td><\/tr> Investment amount in FY 2024-25<\/td> 3,00,000<\/td><\/tr> Value at redemption (after 3 years)<\/td> 4,50,000<\/td><\/tr> Total gain\/profit<\/td> 1,50,000<\/td><\/tr> Exemption available as per the income tax rules<\/td> 1,25,000<\/td><\/tr> Taxable LTCG<\/td> 25,000<\/td><\/tr> LTCG rate<\/td> 12.5%<\/td><\/tr> Tax payable in FY 2027-28<\/td> 3,125<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n How to plan ELSS mutual fund redemption smartly<\/strong><\/h2>\n\n\n\n
Important points to note<\/strong><\/h2>\n\n\n\n
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Conclusion<\/strong><\/h2>\n\n\n\n