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Fortnightly Market View: A Short-term Dip Possible
If you take a longer view, good stocks still have  room to go up, but in the short term a dip...
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Best & Worst Mutual Fund Schemes

The best# three and the worst three schemes over the past three years, in different...

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Emergency Fund
I  have emergency funds parked in liquid schemes and plan to use these only in case of extreme emergency. What are the tax implications of this fund and the withdrawal amount in case of any emergency? Should I keep holding this fund or should I convert it to a bank FD?
 
MLF’s Reply: Capital gains on mutual fund units are calculated on a ‘first-in-first-out’ (FIFO) basis. Therefore, on units purchased three years ago or more, long-term capital gains will be taxed at a rate of 20% with indexation (Finance Bill 2014). 
 
Capital gains on units held for less than three years will be taxed as per your income-tax bracket.
 
Since the purpose of this investment is for an emergency, a bank FD may not serve the purpose, as you may end up withdrawing your investment before maturity and may have to pay for premature withdrawal.
 
The tax-implication (short-term) will be the same for both the financial investments. However, for units held for more than three years, you may have to pay lower tax on the liquid scheme because of the indexation benefit.

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