I am planning an off-market (paper-slip ) transfer of equity shares from one of my demat accounts to another. The shares in the old account qualify for long term capital gains. What will be the taxation implication in case of such a transfer or if I sell the shares within a month of the transfer?
—Navalkishor Kedia
There will be no capital gain tax in your case as there is no buying and selling transaction involved in such transfer. The question of capital gains would come when you have any realized gain or loss. In the case of listed equity shares, the short term capital gain is applicable up to one year and the long term capital gain after one year of holding. It is for unlisted shares where the long term capital gain is applicable after three years.
My 35-year-old daughter wants to invest ₹7 lakh in mutual funds for a period of 3-5 years. How should she go about with it?
—Name withheld on request
In the present scenario, it could be better to invest ₹7 lakh over 2 to 3 months. Since her time horizon is 3 to 5 years investing the complete amount in equity may not be the best option in our view. One must have a minimum horizon of 5 years to invest in equity.
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Hence, she can consider dividing her investment into equity funds and balanced advantage funds (BAF). his will help her to reduce the risk and volatility in case she needs some invested amount after 4 or 4 years. Also within the equity mutual funds, it would be good to consider large-cap oriented funds as the time horizon is around 5 years. Mid-cap and Small-cap funds may carry higher risk compared to large-cap considering the time horizon.
Following are the funds in which she can invest:
UTI Nifty Index Fund (20%), Canara Robeco Bluechip Fund (20%), ICICI Prudential Balanced Advantage Fund (15%), HDFC Balanced Advantage Fund (15%), Parag Parikh Flexicap Fund (15%), and SBI Large & Mid Cap Fund (15%).
She can invest the complete amount in 2 to 4 tranches within the coming three months and give sufficient time to the market to deliver results for her investment.
Harshad Chetanwala is co-founder at MyWealthGrowth.com.