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Should I invest in ELSS Scheme from the sale proceed of selling a house

Should a investment in ELSS Scheme from the sale proceed amount of selling a house for Rs. 38 lakhs is a wise decision. If not then what are ways in which tax can be saved and the sale amount also gets appreciated over a period of time?

Sep 6, 2016 by Deep, Patna  |   Mutual Fund

Investing in ELSS the proceeds received from sale of a house is not a wise decision. Please note that by investing in ELSS funds you can only save Rs. 150,000 per annum under Section 80C of the Income Tax Act 1961. ELSS investing is not meant for saving taxes on capital gains arising out of sale of property/ house.

For the proceed received from sales of a house, you need to calculate capital gains taxes after indexation. We think, you should consult a tax advisor and ask him to help you with taxation on this sales.

If it is found that you need not pay any taxes, then you might think of investing in diversified equity funds, provided you are ready to take moderately high risk with an investment horizon of 5 years or more.

If you need to pay taxes, according to your tax consultant, then you should do that or opt for investments which are qualified for saving capital gain taxes. Any amount left after this, then can be considered for investing in mutual funds.

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