Dividend on MF Units & Profit/Loss on their redemption

This query is : Resolved

CA Sanjay Baheti (Querist)
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18 July 2011 One of My client being HUF is getting Dividend Income regularly on various MF units invested through SIP.whether the same are treated as exempt Income.if yes under which section,please specify.

Secondly he has ivested in the units of the following MF's through SIP & redeemed the same in F.Y.2010-11 details as under:-
i)HDFC TAx Saver Rs 27000/- invested on DT06.07.2006 & redeemed on Dt.10/05/2010 for Rs.24626/-
ii) ICICI Prudential tax Plan Rs.27000/ invested on DT 07.07.2006 & redeemed on DT.22.09.2010 for Rs.22949/-
iii) SBI magnum Tax Gain invested on Dt.30.06.2006 Rs 27000/- & redeemed on Dt.10.05.2010 for Rs.21366/-
iv) Reliance Tax Saver invested Rs 22500/- on Dt.30.06.2006 & redeemed on Dt.08.07.2010 for Rs.25357/-
How to be treated from tax point of view i.e whether profit/Loss on redemption of MF units are considered as longterm gain /loss under head capital Gains or not.

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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18 July 2011 Dividends are exempt under section 10(34)

In all the above cases.. there are long term capital loss. If STT is also paid on redemption then , these losses will have to be ignored.

But if STT has not been paid.. then you can claim these LTCL against any available LTCG. Further you can also take the benefit of Indexation.