'Can I Sell Shares To Pay Home Loan And Avoid Tax?'

Do you have financial planning or income tax queries?
Please ask your questions HERE and rediffGURU Anil Rego, founder and CEO, Right Horizons (external link), will answer them.

Somasundaram: Shall we get tax benefit on capital gain which amount invested in fixed deposited in the bank for 5 years?

If you invest your capital gains in a fixed deposit, it does not qualify for any capital gains tax exemption. It is only available for reinvestment into a house, that too only on Long Term Capital Gains.

VSPMANI: Am I liable to pay LTCG/STCG for the MF UNITS switched from Equity Scheme to Liquid Scheme. Is STT applicable for switch from Liquid Scheme MF to Equity Scheme MF or vice versa?

When switching from an equity scheme to a liquid scheme, you are liable for STCG or LTCG depending on the holding period. A switch is treated as a sale of the scheme you are switching out of and as a purchase of the scheme, you are switching into. STT is applicable on mutual fund switches.

Anonymous: If you have US listed shares and after selling them normally we have to pay short or long term gain tax. Can I use that amount to pay my home loan to get exempt from capital gains or no?

Under Indian tax laws, the sale of USA-listed shares is subject to capital gains tax, depending on the holding period. If held for less than 24 months, it's short-term capital gains (STCG), and if held for over 24 months, it's long-term capital gains (LTCG).

There is no provision under Indian tax laws that allow you to set off capital gains tax by paying off a home loan. The benefit is available to reinvest LTCG into purchase of a house, not repayment of a loan.

DILIP: Hello, i am accountant and my salary in pvt company is 55k and my age is 52 and only 6 year is pending for retirement i started late investment in mf and at present i start at 26000 per month in mf and 12500 in ppf in that my 16 lakh is there and another 6 year pending for expired ppf.
How i can achieve target of 1 crore after my retirement in mf my present value is 12 lakh?

Since you are approaching retirement, we've assumed a moderate return of 10%. To reach a target corpus of 1 crore and your portfolio consists of mutual funds and PPF investments, you can partially utilise the PPF maturity value, which is projected to grow to 35 lakh over a 6 year period at an interest rate of 7.1%.

To achieve the deficit, we recommend an additional SIP of Rs 16,000 along with your current SIP to achieve your goal. If you are not able to do this amount immediately, you can start off lower and increase your SIPs more aggressively. It is possible that your returns also are better and may also cover some of the gap.

Anonymous: Hello Sir, I am a 41 year old and I have been investing in MF through SIPs for the last 4 years. My current portfolio valuation is around 18 lakh with a monthly SIP of Rs 20,000.
My goal is to continue investing for another 5-7 years and accumulate Rs 60 lakh plus for my retirement. I have a surplus cash of Rs 6 lakh which I plan to invest lump sum in MF.
Please would you suggest 4 funds with horizon of 5-7 years with moderate risk and which will help to achieve my goals?

As you're planning for your retirement goal and desire moderate risk, we suggest investing in hybrid funds and considering the longer time frame you may include equity funds also for part your portfolio. Equity funds can be invested through Systematic Transfer Mode. Here are the recommendations:

• HDFC Balanced Advantage Fund: Rs 2,00,000
• ICICI Prudential Equity & Debt Fund: Rs 2,00,000
• Nippon India Multi Cap Fund: Rs 1,00,000
• ICICI Prudential Large & Mid Cap Fund: Rs 1,00,000
• You can ask rediffGURU Anil Rego your personal finance questions HERE.

Disclaimer: This advisory is meant for information purposes only. This advisory and the information in it does not constitute distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this QnA or an attempt to influence the opinion or behaviour of the investors/recipients.

Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.