1

If I invest in ELSS under section 80 C, I am given to understand that I can withdraw the money after 3 years.

  1. Do I need to get my employer involved while withdrawing the money?
  2. Is the money tax-free at withdrawal?

My current situation is that I invested 80000/- in ELSS for 2019-20 under 80C and 70000/- in EPF under 80 C again. There is a chance that I might stop working voluntarily. I am concerned that should I do this they will not allow me to withdraw my EPF money tax-free at the end of five years. So I am thinking of investing another 70000/- in ELSS for 19-20 so that at least the ELSS money is available for me to withdraw tax-free after five years. Am I right in my thinking?

1

Employer is not involved in redeeming ELSS. There is no tax on the capital invested. Any gains if more than Rs 1,00,000 Including gains from other stock investments would be taxed at 10%.

Edit:
1. In a given financial year say ELSS ELSS gains is Rs 50,000 and other stock gains is say Rs 40,000. No capital gains tax.
2. In a given financial year say ELSS ELSS gains is Rs 1,20,000 and other stock gains is say Rs 40,000. 10% LTCG tax.
3. In a given financial year say ELSS ELSS gains is Rs 50,000 and other stock gains is say Rs 60,000. 10% LTCG tax.

So if your only investments is ELSS, ensure you redeem only to the extent of gains less than Rs 1,00,000 to avoid taxes

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  • Thank you. Does this mean every time I withdraw from ELSS after the three year lock-in period I just have to ensure that the capital gains specifically on the units redeemed do not exceed 1 lakh in order not to owe taxes? And is the one lakh limit for a given fiscal year? Also, can you answer the second part of the question? – user2371765 Jun 1 at 14:14

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