Tax effect on withdrawal of ELSS Fund?

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  1. rajagopal87

    rajagopal87 New Member

    Hi friends,

    I have invested some money in october 2011 in ELSS fund. I have also claimed 80C benefit for this amount. Now that the lock in period of 3 years is over, I am planning to withdraw the same.

    I would like to know if there are any tax implications. Should I pay any tax on either the principal invested amount or the gains? Should I declare this amount in this year IT return (like other source income etc..) ? Is any tax is applicable on the same? If no, how to indicate the same in IT return?

    Thanks and regards.
  2. gaurav_kumar

    gaurav_kumar Well-Known Member

    Dear @rajagopal87

    The good news for you is that no tax would be levied on the amount withdrawn from ELSS after the lock-in period.

    The Principal as well as the Capital Appreciation is exempted from the levy of Income Tax.

    The Capital Appreciation is exempted from levy of income tax. However, even though it is exempted, it is required to be disclosed in the income tax return.

    The procedure to disclose exempted income in the income tax return has been explained here -
  3. rajagopal87

    rajagopal87 New Member

    Thank you gaurav...

    If my understanding is correct it should be shown under 'Long Term Capital Gains from sale of Shares on which STT has been paid' category. Am I correct?

    Also, should I show only the gains or should I show the total amount? Eg- suppose I invest 40k and now get back 60k, should I show 60k in the return or only 20k?
  4. gaurav_kumar

    gaurav_kumar Well-Known Member

    Only the gains is to be disclosed as exempt income in the income tax return.

    So, in the above mentioned example only Rs. 20,000 is to be disclosed in the income tax return
  5. rajagopal87

    rajagopal87 New Member

    Thanks a lot for the information gaurav... :)
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