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Tax Implications on ELSS

Ranjeet Jha had invested a lakh in HDFC Tax Saver ELSS in 2006. He wants to know about the tax implications when he redeems the units in 2009. Here's how tax is computed on ELSS funds...

I had invested Rs 1 lakh in 2006 in the HDFC Tax Saver ELSS. What's the tax implication (long term capital gains tax/income tax) when I redeem units in 2009. Will the profit/principal or both be included in the income for year 2009?
-Ranjeet Jha

HDFC Tax Saver is an equity linked saving scheme (tax saving mutual fund). As it is an equity oriented fund (those with equity exposure greater than 65 per cent), there would be no tax liability on the redemption amount. The income in the form of dividends (if any) from an equity fund are also tax free in the hands of the investor.


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