Can I redeem investments in a tax saving fund before the completion of the mandatory lock-in? What will be the impact of such a move?
Aakar Rastogi, Noida
To avail tax deductions at the time of investment and tax free redemption, investment in a tax planning fund has to remain invested for three years, which is the mandatory lock-in. However, one can redeem the units before the completion of the three year lock-in by losing on the tax benefit one would have availed at the time of investment. This redemption will get reflected when filing taxes and will need to be adjusted with for the year when the deduction was claimed.
