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Is mutual fund gain taxable?

13 September 2018

I took mutual fund (tax saving fund) almost 9-10 years back. Now, I sold them with profits of 212% which gave me gain of 3Lacs.

In figures: Investment amount is 1.43Lacs. After selling them in month of June 2018, I received amount close to 3Lacs with payout dividend of 1.46 Lacs .

Is it profit and dividend amount taxable along with my salary? If yes, how much? In case if it is taxable, can I adjust it with capital loss (due to loss in foreign stocks) occured in this year?

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Rajesh Kumar Pandey (Manager-Accounts) (64 Points)
Replied 13 September 2018

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HOME | BUDGET 2018

Gains From ELSS Mutual Funds Will Not Be Tax-Free From April 1: 5 Points

ELSS funds have a lock-in period of three years, the shortest among the instruments that qualify for income tax benefits under Section 80C.

Budget 2018 | NDTV Profit Team | Updated: February 13, 2018 16:24 IST

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Gains From ELSS Mutual Funds Will Not Be Tax-Free From April 1: 5 Points

Apart from growth options, ELSS funds also offer dividend options (Representational image)

With rising equity markets, ELSS or equity-linked savings schemes have gained popularity as an income-tax saving instrument. ELSS, a mutual fund investment scheme that invests in equities, qualifies for deduction under Section 80C of the Income Tax Act. Investments up to Rs. 1.5 lakh in ELSS funds or income tax-savings mutual funds can be claimed for income tax deduction in a financial year. Apart from growth options, ELSS funds also offer dividend options. ELSS funds have a lock-in period of three years, the shortest among the instruments that qualify for income tax benefits under Section 80C.

(Also read: 10 income tax changes announced in Budget 2018)

From April 1, a new long-term capital gains tax will be imposed on equity mutual funds, including ELSS funds, according to Budget 2018 proposals. Also, dividend from equity mutual funds (including ELSS) would be taxed. For income tax purposes, a mutual fund scheme that invests 65 per cent or more of its portfolio in equities or equity-related instruments is considered an equity fund.

Here are five things to know on the new tax regime on ELSS funds:

1) The 10 per cent long-term capital gains tax on redemption of equity mutual fund units, including ELSS funds, will come into effect from April 1, 2018. So, if you sell before on or before March 31, 2018, there will be no long-term capital gains tax. Long-term capital gains mean gain or profit arising from selling of stock or redemption of equity mutual funds held for more than one year.

2) Long-term capital gains exceeding Rs. 1 lakh arising from redemption of mutual fund units or equities on or after April 1, 2018 will be taxed at 10 per cent (plus cess). This includes long-term capital gains earned from your equity or mutual fund investments put together in a financial year. Suppose you earn Rs. 1.5 lakh in combined long-term capital gains from stocks or mutual fund investments in a financial year. The taxable long-term capital gains will be Rs. 50,000 (Rs. 1.5 lakh - Rs. 1 lakh) and tax liability will be Rs. 5,000 (10 per cent of Rs.50,000).