Curious about tax savings
What are the tax implications for withdrawing my tax-saving investments?
Withdrawals from taxsaving investments may have different tax implications depending on the type of investment and the duration of holding.
In the case of investments made under Section 80C of the Income Tax Act, such as Public Provident Fund (PPF), EquityLinked Saving Scheme (ELSS), National Savings Certificate (NSC), and taxsaving fixed deposits, the maturity amount is taxfree. However, if the investment is withdrawn before the maturity period, then it would be taxable as per the investor's tax slab.
For investments made in taxsaving instruments like Unit Linked Insurance Plans (ULIPs), the longterm capital gains (LTCG) tax of 10% on gains above Rs. 1 lakh would be applicable if the investment is held for more than one year. If the investment is held for less than one year, the shortterm capital gains (STCG) tax would be applicable as per the investor's tax slab.
It's important to note that different types of taxsaving investments have different tax implications. Therefore, it's advisable to consult a tax expert or financial planner before making any investment or withdrawing from such investments.