TAX SAVING INVESTMENT NITIN GOKHALE MUMBAI BASED TAX CONSULTANT REPLIES TO QUERIES

Deepali asked, hi nitin, i have a portfolio consisting of mutual funds and PPF. MF are mostly tax saving but are not performing as expected. i have HSBC Progressive themes(D), ICICI pru infra (G), Kotak tax saver(G), principal tax saver, Relaince tax saver(ELSS), SBI magnum tax gain(D), Sundram energy(G). I have a net loss of 63k till date. i have to invest rs 1 lac for this financial year. please suggest some good funds.
Nitin Gokhale answers, You can invest into SBI Magnum Tax Gain, Sundaram Tax Saver, HDFC Tax Saver.. pls note that the loss is more from market timing of the investment. You need to invest into elss funds again this year so that you can average out your cost and that will help you recover capital more quickly. Also spread the same over a few installements and if possible through a 6 months SIP. This will further help you reduce the risk of your equity investments.

sunil asked, I have booked FD in a bank in my wifes name whose income is less than 1.5 L , should I declare the interest on fd during return filling...?
Nitin Gokhale answers, If spouse has no income out of her own qualification and abilities, then it is subject to clubbing with the income of the earning spouse.

ajoy asked, Hello Nitin, I am an NRI and have term deposits of Rs 20L. The TDS deduction on the interest is around 33%, how much can get back and how?Nitin Gokhale answers, That would depend on your overall income. If you are in the highest tax bracket, then you cannot get any refund.

HS asked, Can you please suggest a good ELSS SIP apart from Fidelity Tax Advantage & SBI Magnum Tax Gain '93, in which I have already invested or should I increase the SIP amount in any of above funds. I am looking at period of 3 - 5 years. Pl suggest
Nitin Gokhale answers, Sundaram Tax Saver and HDFC Tax Saver can be considered.

miroo asked, Dear Sir. Good Afternoon to you!!! I am 28 and earning 30k per month. My employer does not provide facility of PF. My current investments are 1L in PPF, 33K in valrious MFs, 4k SIP per month in Diversified MFs, 3k per month in ULIP. Pls. guide me regarding my investment and future investment.
Nitin Gokhale answers, You are already investing in a pretty diversified set of avenues.. Keep it up. At your age, you can take a higher level of risk. However considering you are not getting PF, you should at least invest 60K into PPF. You already have a ULIP and you can continue with that. Look at your overall monthly surplus and you can invest most of that into a systematic investment plan. I would suggest about 50% of your funds can be midcap funds. Not sure how your liquidity is, but I would suggest some portion of your investments can be in liquid debt avenues like debt mutual funds or even bank fds that could be stopped in case of an emergency.

Akash asked, Hello, I have invested 20000 rs in Reliance super market return plan full equity. Jeevan surbhi 25000/- . LIC profit plus 25000/-. Is this OK or any more suggestion is there
Nitin Gokhale answers, You should diversify across avenues from predominantly insurance options currently. You can invest into equity mutual funds through a systematic investment plan. You can also invest part funds into debt options like PPF.

Barry asked, Which is the best diversified equity mf with a 5 year time frame ?
Nitin Gokhale answers, unfortunately past returns need not mean future returns.. hence you should invest into a basket of funds. HDFC Equity, Canara Robeco Equity, Franklin India Flexicap among large cap and Reliance Regular Savings Fund/Reliance Growth, SBNPP Select Midcap, Birla Sunlife Midcap under diversified midcap funds. Depending on the amount you are investing you can choose about 2-6 funds.

srikanth asked, Hi Nitiin, I had taken Housing loan from LIC they were charging Intrest 10.5% , SBI is Charging 8%, how can i ask them reduce intrest rate..??
Nitin Gokhale answers, Unfortunately organizations do not reduce the interest rate for existing customers every time they reduce it form new customers. You maybe forced to change the bank if you want to reduce the same and your bank is unwilling. Pls also keep in mind that SBI is 8% only for the first 2 years.

ravid asked, tax benfits we will get for investments to charity or trust
Nitin Gokhale answers, Under Section 80G, you can get the benefit for charity. the organization needs to be registered and will give you a receipt which will tell you whether you get a 50% or a 100% deduction from your taxable income.

sanju asked, pls suggest good investment plans for kids(1.5yrs age)Nitin Gokhale answers, Partly through traditional insurance plan. Pls choose a plan where the parent is the life assured. This gives a double benefit in case of life risk. the sum assured is paid out on life risk plus the maturity value is paid out as planned by you. In addition, you could use a sip into equity mutual funds considering that equities do well in the long term which is what you are looking for.

chid asked, Hello Nitin I have got the redemption amount of one of the tax saving bond. A 10.3% of tax has been deducted at source on the interest part of it. I have been issued form 16A. Should I show this in my Tax returns form? I fall in 30% tax bracket. Should I pay the balance tax?
Nitin Gokhale answers, Yes, you need to include it while filing your returns and you need to pay the balance tax if you are in a higher tax bracket. Pls do not miss this out since the IT dept is well automated and your IT office would have details of the other income as well.

vishal asked, Is reliance regular savings fund-growth good option at this point of time?
Nitin Gokhale answers, Midcap funds are likely to do well over a 2-3 year time horizon. However considering the market run up do phase you investments over a period.

Jagdish asked, I would like to invest Rs.20000 per year, with my 1 year old son, which plan (MF/Insurance/Equity ) suitable to me??
Nitin Gokhale answers, For needs like children's education, I would suggest you can prefer a traditional children's insurance plan. You can top that up with other market linked avenues including a monthly systematic investment plan.

GG asked, Hi I am working software field abd getting 45k permonth as you know we dont have job guaranty could u please suggest such tax savin plan which helps me in tuff situation also
Nitin Gokhale answers, I would suggest you invest part of your savings in liquid debt avenues to plan for about 6 months of expenses. Unfortunately tax savings options are not liquid and hence these may be non tax saving funds. You can also use a bank fd which you can prematurely close.. the tax benefits can be reversed but that will not be of great concern if one has lost a job. Beyond that you can invest some into market linked avenues to provide you upside and keeping in mind that you will earn a lower return on liquid debt funds. Once you reach 6 months of buffer then you can start partially investing into locked in debt options like PPF, NSC, etc that give you better returns and also have the option of increasing exposure to higher risk ELSS mutual funds.

sunil asked, where to invest with minimum risk in 2009..
Nitin Gokhale answers, Low risk could cap your returns especially in periods where markets can run up after we are out of an economic downturn. Best way is a diversified approach as suggested earlier.

mamu asked, Mr Nitin, can I invest in PPF to save tax and also expect good investments returns 15 years from now?
Nitin Gokhale answers, PPF today provides among the best post tax returns Vs other deposits. However, I would always suggest a balanced approach with a combination of avenues as each avenue has its one benefits and negatives. Eg PPF is low on liquidity in the first few years.

jiji asked, I would be selling my house and the money that the derive form the deal approx 15lakhs would like to invest where i can get gurrantted returns pls suggest something
Nitin Gokhale answers, It is a good idea to invest in a combination of avenues. Broadly, if you are looking for avenues outside real estate, you can diversify between Debt options and Equity Options. Debt options provide you safety and can be across Post office savings like NSC, PPF, Bank Fixed Deposits and Debt mutual funds. You can take risk for part of the funds where you can park money into a liquid mutual fund and do a systematic transfer into equity funds over about 6-12 months. Transfer as much into equity keeping mind your risk profile. While investing in debt options keep in mind that some avenues that give you returns through interest could be tax inefficient. Hence always look at post tax returns before investing.

mak asked, Hello Nitin I am investing in following funds through SIP.I have 10-15 year time zone in mind. Franklin India Opportunities Fund - Equity - Diversified, HSBC Tax Saver Equity Fund - Equity - ELSS, Principal Personal Tax saver - Equity - ELSS, SBI Magnum Tax Gain Scheme 93 - Equity - ELSS I am expecting 20-22 % return. Please suggest should I continue with them or should change the fund Nitin Gokhale answers, You could replace the Principal Personal Tax Saver with Sundaram BNP Paribas Tax saver. You could also change the Franklin fund to a Reliance RSF fund or Birla Midcap fund to give some midcap exposure considering the long term nature of your investment.

Karthik asked, Hi I'm willing to take risk but I want to have high returns. Suggest some tax saving investments.
Nitin Gokhale answers, The two highest level risk investments as part of tax saving investments would be the ELSS Fund which is the tax saving mutual fund. The other option to take risk would be through the Unit Linked Insurance Plan(ULIP). The ELSS fund could be used through the systematic route especially since markets have run up a bit. Or at least can be phased in over a period. Use the ULIP if you are looking for life cover as well. ULIPs have higher initial costs and hence only invest if you are looking at a horizon of over 7 years. Also do evaluate the same carefully since there is a lot of mis selling that happens on this avenue.