Best Income Tax Saving Mutual Funds

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• Hi pankaj..
  What is the difference between growth plan and Dividend reinvestment plan??
  Plz tell me which one is better irrespective of risk.....

  • @SudhirBhardwaj
    Dividend reinvestment plan is a good plan for income tax saving funds. Whatever dividend is reinvested in a year, it can be considered as fresh investment and can be counted under 80C savings. Lets say, you invested 50K in a tax saving mutual fund in year and a dividend is announced of around 5K, which is invested automatically again into fund. Then total savings you can declare is 55K.
    Growth option is better if you want to be invested for a longer period.
    If you are investing not for just income tax savings purpose, but for long term growth, then growth plan is better.

• Howz Canara Robeco Equity Tax Saver compared to other tax saver funds?

  • @SalilJain
    Canara Tax saver is one of the best performed fund.

• Hi,

  i want to invest in mutual funds for tax saving,so please suggest me which mutual fund is beeter to invest.

  regds
  sandde[

  • @Sandeep
    You can invest in Canara Robeco Equity Tax Saver, Sundaram BNP Paribas Taxsaver, HDFC Taxsaver, SBI Magnum Tax Gain Scheme 93 – Dividend, Franklin India Taxshield – Growth, DSPBR Tax Saver or Fidelity Tax Advantage.

    Read more: http://www.pankajbatra.com/finance/best-tax-saving-mutual-funds/#ixzz0oxNbUBlP

• Dear Pankaj
  Kindly suggest me the best Index fund

  • @Sudhir
    Some of the good Index funds are Banking BeES, Nifty Junior BeES, HDFC Index- Sensex Plus Plan, Kotak PSU bank ETF, PSU Bank BeES and ICICI Prudential Index Retail.

    • thanks Pankaj..
      But I wanted to ask abt nifty index fund of different fund house..

      • @Sudhir
        Some of the good Nifty funds are Nifty Junior BeES, Franklin India Index NSE Nifty, Nifty Benchmark ETS, UTI Nifty Index and Canara Robeco Nifty Index

• Hi pankaj,

  My portfolio contains
  70k in PPF
  12k in LIC
  i want to enter mutual fund market and start with HDFC ELSS schemes, i plan to invest around 40k per anum....could you please tell me if this is the right decision

  • @Shashank
    HDFC Tax saver is a good fund to invest. You can split your amount among Canara Robeco Equity Tax Saver, HDFC Taxsaver, Fidelity Tax Advantage and Franklin India Taxshield.
    Also in case you don't have term insurance, get that first (at least for coverage of 100 times your monthly salary).

• Dear Pankaj,

  I was told by my broker that the income from Monthly Income Plans of UTI (LTA), Reliance and HDFC are all income tax free because of the equity component in these schemes. Please let me know if this is correct. Also, if the units are sold after one year, will they attract the Securities Transaction Tax ? If so, is this to be paid by me ?

  • @Utpal
    Dividends earned from MIPs are tax free.
    As MIP are not fully equity based funds, For short term capital gains (MIPs sold before one year), the gain will be added to taxable income and income tax will be applicable as per your personal income tax slab. If you sell units after a year, a long-term capital gains tax is applicable - 10 % tax will be levied (without indexation benefit) or 20 %tax with indexation benefit, whichever is lower.
    STT is levied only on equity oriented mutual funds.

• Hello Pankaj,

  Thanks for your clear reply. I appreciate this very much and thank you for it. I will come back to you from time to time with other queries.

  • Hi Pankaj,
    I invested in money plus(180) in 2007 Rs 60,000, 2008 and 2009 also. Looks like performance is not good.
    Can i keep those or as three years are completed can I close?

    Thanks,
    Rambabu

    • @Rambabu
      Money Plus is not a very good product.
      Instead of this, you must have got term insurance and equity based mutual funds.
      If its not in loss and its terms/conditions allow you to sell after 3 years, you may decide to sell these and better invest in some better product.

• Hi Pankaj...for a 3-4 year investment..for tax saving as well as a decent return(if thts possible)
  would the growth or the dvidend (if dividend, payout or reinvestment) be better.
  Thanks,
  Phoenix

  • @Phoenix
    Growth option is better if you want to be invested for a longer period, dividend when you need your money back at regular intervals.
    Reinvestment is good for tax saving as it reinvests dividends back into mutual fund so whatever money is reinvested can also be considered for tax saving purpose.

• and one more things..what exactly is term insurance?? how does it work??

  Thanks,
  phoenix

  • srry..looked arnd..no need to ansr this

    • Hi,

      I want to know how term insurance work? And is it really needed.

      • @Sreelatha
        Term insurance is a pure insurance product. Its least expensive insurance product.
        A 25 years old person can get cover of 50 Lakhs for just 8-10000 per year premium for 35 years terms.
        Ideally everybody should be insured by at-least 8-10 times his/her yearly salary.
        In case of death of insured person before term completion, nominee will get whole insurance cover amount. There is no return in case insured person cross the insurance term.

        Mostly the liabilities of a working person (like family expenses, house loan, car loan, children education, their marriage etc.) are till his retirement age (60-65 years). So term insurance covers risk of a person from all these. If only working person of a family passes away before his/her age, this amount can take care of all family future requirements.

• Thnx for the reply Pankaj...but the HDFC I called said that reinvestment was not a good option..because once I opt for it after the frst year..there will b a lock in period for another 3 years starting from the day of reinvestment..so I wont be able to redeem the scheme immidiately after the first 3 years...if that is the case..how is reinvestment a better option?? could you please throw some light on this?thnx..
  Regards,
  Phoenix

  • @Phoenix
    3 years Lock in on tax saving mutual funds starts from date of purchase of funds.
    So in case of reinvestment mode, let say you purchased P units on Feb'08 and a dividend was declared in May'10, which was used to buy (reinvestment) Q more units. Now you can redeem P units after Feb'11 and Q units after May'13.
    Also one more advantage here is, you can show investment for Q units as tax saving investment in year 2010-11 and P units in 2007-2008.