Is the dividend re-investment in a Tax Saver fund also subject to a lock-in period of 3 years? Also post completion of the 3 year lock-in period, can the non-dividend part be redeemed?
A. Any investment made into an Equity Linked Saving Scheme (ELSS) is subject to a lock-in period of 3 years. This holds good even for dividends from ELSS which is re-invested if the investor has chosen the dividend re-investment option. The implication for the investor is that some portion of his investment will always be locked-in because dividend declared is re-invested and will attract a three year lock-in. However, any portion of the investment, whether originally made or as a result of dividend re-invested, which has completed the lock-in period of three years, can be redeemed by the investor. Alternatively, investors may choose the growth option while investing.
Source: FT
Director, Centre for Investment Education and Learning
A. Any investment made into an Equity Linked Saving Scheme (ELSS) is subject to a lock-in period of 3 years. This holds good even for dividends from ELSS which is re-invested if the investor has chosen the dividend re-investment option. The implication for the investor is that some portion of his investment will always be locked-in because dividend declared is re-invested and will attract a three year lock-in. However, any portion of the investment, whether originally made or as a result of dividend re-invested, which has completed the lock-in period of three years, can be redeemed by the investor. Alternatively, investors may choose the growth option while investing.
Source: FT
Director, Centre for Investment Education and Learning
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