Is mutual fund taxable?

Hi everyone,
I have invested in a mutual fund for a period of two years. The last SIP is due this January’13. I have started this investment (equity) in Jan’11.
My question is; Will I be taxable if I en-cash the gain within this March’13? Or anytime within Jan’14 (considering the 1 year limit – read in couple of websites that it will not be taxable if withdrawn after 1 year of investment)
I am a novice investor and trying to juggle within taxes and creating wealth. Many thanks for helping me in advance.

With regards,

4 Replies to “Is mutual fund taxable?”

  1. Yes it is taxable.

    The limit of 1 year is for exit fee, in case if you withdrawal from SIP within an year there will an exit load post 1 year the exit load will be exempted

  2. MF gain will attract short term capital gain, if it is hold for less than a year.
    Nature of capital gains arising to unit-holder who has invested by way of SIP will depend upon the period of holding of units. There may be two situations-
    i) Where SIP is closed and some / all units are redeemed ;
    ii) Where SIP is not closed but some / all existing units are redeemed.
    At the time of redemption it is impossible to understand as to which units are being redeemed. In this condition, for computing the capital gain chargeable to tax, the cost of acquisition and period of holding of units shall be determined on the basis of First in First Out method.
    If your first installment of has completed the one year. You can redeem the units allotted on first installment.
    You can avail the Systematic Withdrawal Plan for avoiding the short term capital gain by opting for periodical withdrawal like SIP.

  3. Mutual fund income is taxable and in certain cases exempt also.

    Which one is exempt?
    The mutual fund which is equity oriented , if held more than 12 months before sale, is 100 % tax free as per section 10(38) of the I.T.Act

    Which one is taxable?

    Mutual funds which are equity oriented but held for less than a year , shall be taxed @ 15 % as short term capital gains.

    Any other mutual fund products , may be taxed as either as short term or long term. Short term is charged to tax @ 15 % and long term is charged to tax @ 10 %.

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