Search This Blog

Is the dividend re-investment in a Tax Saver fund also subject to a lock-in period of 3 years?



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?

 Any investment made into an Equity Linked Saving Scheme (ELSS) is subject to a lock-in period of 3 years, same holds 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However, any portion of the investment, whether originally made or as a result of dividend re-invested, which has completed the lock-in period of three years, can be redeemed by the investor.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, or if opted for dividend reinvestment and want to make changes, he can do so by making changes in dividend option, i.e from dividend reinvestment to dividend payout.

Also refer:

Tax Treatment for Equity Linked Savings Scheme (ELSS)

Tax Treatment of Public Provident Fund (PPF)  


No comments:

Post a Comment

Blog Archive

Scan this QR code using a bar code scanner on your smart phone to get instant information about us

Scan this QR code using a bar code scanner on your smart phone to get instant information about us
Investing Can be Interesting & Financial Awareness

Popular Posts

Golden Rules for Investing

Golden Rules for Investing
Golden Rules for Investing