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Redeeming ELSS SIPs

How the redemption system works in ELSS

I have been investing via SIPs in Magnum Taxgain since June 2006. The three years lock-in period will get over in June 2009. In the first year, I was investing in the dividend re-investment option. From May 2007, I started investing in the growth option. Will the first year’s SIP be included in the three years lock-in period? When can I withdraw the total money?
-    Joya

Each SIP is a fresh investment in the fund and each instalment in a tax saving fund needs to complete three years of holding, which is the compulsory lock-in period.

If you have been doing SIP in the fund since June 2006, that doesn’t mean that your lock-in period will get over in June 2009 and you can withdraw your total investment. Yes, the first SIP will complete its lock-in period in June 2009 but the units bought the next month i.e. July 2006 can be redeemed only in July 2009, so on and so forth.

Coming to your last question, the SIPs done in the first year in the dividend re-investment option will also have to be compulsorily locked-in for three years. A change of plan does not change their lock-in status. Since you were investing in the dividend re-investment option in the first year, it must be noted that the compulsory lock-in period of three years is also applicable to the dividends reinvested.

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