Ask ET Mutual Funds: Can you invest capital gains from property in MFs?

Which mutual funds come under section 54EE (Startup Fund of Funds) available for investing property capital gains through sites like ICICI Direct, Kotak Securities and HDFC Securities?
– Sunil G. Bhatikar

KishorKumar Balpalli, founder, MyMoneySage.in, responds:
There are two avenues available under Sec 54EE to avail capital gain tax exemption:

1. You may invest in fund-of-funds which primarily invest in startups. These fund-of-funds are different from mutual funds (fund-of-funds). The maximum amount that can be invested is Rs 50 lakh with a three-year lock-in period. Premature withdrawal would nullify the tax benefits availed earlier.


2. You may also directly subscribe to shares of a startup. However, it should be a majority stake. That is, 50 per cent or more and the startup must have deployed the money in its activities before you claim a tax exemption.

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