I was an NRI till March 12. As an NRI , I invested in HDFC MIP Long Term Growth (during financial year 2011-12). I want to know if this investment qualifies for deduction from income (upto Rs One lakh) under section 80C ?
- S Vaidyanathan
HDFC MIP Long Term Growth is a hybrid debt oriented fund with taxation same as a debt fund. Your investment in HDFC MIP Long Term Growth will not qualify for deduction under section 80C. It will be taxed like that of a debt fund. If investment is made for less than 12 months, the profit made will qualify to be short-term capital gain. This will be added to your income and taxed according to your income tax slab. While an investment for more than 12 months will qualify for long-term capital gains tax. It will be taxed at 10 per cent without indexation and 20 per cent with indexation.
A notified tax saving fund also called as equity linked saving scheme (ELSS) invests more than 65 per cent of its assets in equity and has a three year lock-in period. Investments upto rupees one lakh in a financial year qualify for tax benefits under Section 80C of the Income Tax Act, 1961. There is a similar sounding tax saving fund- HDFC Long Term Advantage and investments in it up to Rs one Lakh will get tax deduction. There is another ELSS scheme of the same fund house- HDFC Taxsaver. You could invest in either to save tax.
This article was originally published on February 08, 2013.
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