Should I purchase capital good points bonds or pay tax and put money into PMVVY?

I’m 70-year-old and have gotten long run capital achieve cash of ₹15 lacs by promoting 30-year-old residential property. I’ve the choice of shopping for the Section 54 EC bonds with lock-in interval of 5 years and a easy curiosity of about 5 p.c. In this case, I wouldn’t have to pay any tax now. Alternatively, I can make investments 15 Lacs in Pradhan Mantri Vaya Vandana Yojana with a better rate of interest however I must pay upfront 20 p.c tax now on a long run achieve of 15 Lacs. Considering a time horizon of 5 years or much less, the place ought to I make investments? My spouse and two daughters are in late thirties.

R P Saxena

At the stage during which you’re at current, liquidity of funding issues loads. Your funding in Capital Gain Bond and Pradhan Mantri Vyaya Vandana Yojana (PMVVY) will likely be locked for five and 10 years respectively, therefore the liquidity downside will likely be with each these investments.

If the lock-in of 10 years of PMVVY is bothering you then, you may take into account Senior Citizen Savings Scheme (SCSS) when you have not invested earlier the place there’s a lock-in of 5 years and the speed of return is identical as PMVVY. However, allow us to take a look at the next situations that may assist you to in making the appropriate choice for you.

₹6 Lacs as much as maturity” title=”In this case, you’ll all the time have liquidity of ₹6 Lacs as much as maturity”>View Full PictureIn this case, you’ll all the time have liquidity of ₹6 Lacs as much as maturity

From the above desk, if you could keep some liquidity then you too can take a look at a mixture of Capital Gain Bond and Fixed Deposit the place you may make investments ₹7.5 Lacs in Capital Gain Bond, pay a tax of ₹1.5 Lacs on the remaining quantity and make investments ₹6 Lacs in Fixed Deposit. With this, you’ll all the time have liquidity of ₹6 Lacs as much as maturity. But you must solely go for this if you happen to want some cash helpful with you all through the approaching 5 years.

Answered by Harshad Chetanwala, founder, Mywealthgrowth.com

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