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when you redeem the mutual fund units you need to pay capital gain tax based on short term and long term
Equity Mutual fund
Short term —- 15% tax on earning if invested for less then a year.
Long term capital gain — 0% if invested for more then a year.
Debt mutual Fund —
Short term — 15%
Long term — indexation benifit in calculating tax
Tax implications of Mutual Funds.
Redeeming an Equity Fund held for > 1 year.
No capital gain tax.
You pay only STT.
Redeeming an Equity Fund held for < 1 year.You pay Capital gain tax + surcharge + cess @ 16.48% + STT.
Capital gain tax + cess @ 15.45% + STT.Redeeming a Dept Fund held for > 1 year.
You pay capital gain tax @ 10% ( without indexation ).
You pay capital gain tax @ 20% ( with indexation ).
Whichever is less.
Indexed or inflated purchase cost = Purchase cost X Present Index / Purchase Index
Redeeming a Dept Fund held for < 1 year.You pay tax on capital gain at the personal tax rate applicable to you.
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