Do you have income tax and personal finance queries?
Please ask your questions here and
rediffGURU Vivek Lala, who is a partner at S L Wealth, will answer them.

Rakesh: I retired from the Railways in June 2022 and received below amounts on retirement:
PF — Rs 23 lakhs
Gratuity — Rs 12 lakhs
Commutation — Rs 13 lakhs
Leave encashment — Rs 9 lakhs.
I also received pension from July 2022 to March 2023 — Rs 2,59,000.
There was no TDS on salary of 3 months.
Do I need to show all of the amounts in my income tax return?
If yes, what is exempt income and how to show all above?

You need to declare all the income though some are taxable and some are not:

1) Pension received is taxable.

2) PF received is not taxable if service is more than five years.

3) Gratuity is exempt up to Rs 20 lakh.

4) For government employees, commutation is not taxable.

5) For government employees, leave encashment on retirement is not taxable.


Pratik: Hi, we are doing our investments in mutual funds.
Currently we save about 30% of our net income in mutual funds, 50% in FDs, 15% in PPF and 5% of our income post taxes, expenses and EMIs. We are looking at mutual fund investments for a time horizon of 20 years.
We investment every month equally in these schemes:
1. Index (ICICI, Kotak, UTI, HDFC)
2. Large Cap (ICICI, Mirae Asset)
3. Mid Cap (HDFC, Mirae Asset, Kotak)
4. Small Cap (HDFC, Kotak, ICICI)
5. Flexi Cap (HDFC, ICICI, Kotak)
6. Multi Cap (HDFC, ICICI, Kotak)
7. Hybrid (ICICI, HDFC, Mirae Asset)
8. Large and Midcap (ICICI, Kotak)
9. Additional (ICICI Value Discovery)
Would like your views on this. I can take some risks since we are additionally saving in FDs as stated above.

Hello, as per the data given by you, assuming you are 35 years old, you have about 20 years to build a corpus and you will have regular income till then. Keeping this in mind, my suggestion would be as follows:

Out of Rs 100 to be invested by you, you should invest 20% in small-caps, 20% in mid-caps, 20% in large and mid-caps, 20 % in thematic funds and 20% in debt/hybrid funds.

Eliminate 100% of FDs and park that existing money in debt funds or split it between debt and equity.

You don’t need index funds as they underperform by 2-7% as compared to the active funds post expenses, so it’s a no brainer to go for actively managed funds.

Please note that these suggestions are based on your stated goals and the information you have provided. It is always a good idea to consult a financial advisor in person to better understand your risk tolerance, time horizon and specific financial goals.


Anonymous: I am a woman, 68 yrs.
My investments in HUCO tax free bonds, Tranche 2 and IIFCL tax free bonds, Tranche 2 are getting matured shortly after 10 yrs of investment with annual interest payment options @8% approx.
Please suggest where this corpus of Rs 7 lakh could be invested for a time span of 5 years max with similar interest payment option.
How about Shriram Motor Finance FD scheme for 60 months and SCSS 2004 or alternatives excluding mutual funds? Thanks.

Hello, my suggestion for you would be to understand more about the debt markets and how they function and how you can use the mutual funds (debt) to get the necessary returns you are looking for with an additional gain due to fall in the interest rates as returns and rates are inversely linked.


Anonymous: What is cumulative return expected if monthly investment of Rs 25,000 is made in the various mutual funds. The horizon is say six years.
Does choice of fund house really matter or it has a nominal/marginal effect?

Hello, you can expect a corpus of 26 lakh approx at 12% XIRR after six years of investment.

Yes, the fund selection matters in terms of entry, exit, category, risks related to the fund, etc, and that can have an impact of 2-8% XIRR which can be a huge amount over a period of 15-20 years.

  • You can ask rediffGURU Vivek Lala your questions HERE.

Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this QnA or an attempt to influence the opinion or behaviour of the investors/recipients.

Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.

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