Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Mutual fund

sharfas (article clerk) (55 Points)

13 June 2018

gain on redemption of mutual fund is exempt or not.

Reply
Follow
Share

4 Replies

Siddharth Goel (Chartered Accountant) (3031 Points)
Replied 13 June 2018

Hi,

The holding period of mutual fund units can be short-term or long-term. In case of equity mutual funds and balanced mutual funds, a holding period of 12 months or more is regarded as long-term. In case of debt mutual funds, a holding period of 36 months or more is regarded as long-term.

STCG on Equity/Balanced mutual funds is taxed @ 15% and LTCG on the same is taxed @ 10% in excess of Rs. 1,00,000/-.

STCG on Debt mutual funds is taxed as per applicable slab rates and LTCG on the same is taxed @ 20% after indexation.

2 Like

Upgrade to CAclubindia Pro. Subscribe Now!

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177824 Points)
Replied 13 June 2018

Correct, but for LTCG of equity oriented MF sec. 10(38) is applicable for AY 2018-19 ......

Ie. Any long term capital gain over equity oriented MF in FY 2017-18 is tax-exempt.

Siddharth Goel (Chartered Accountant) (3031 Points)
Replied 13 June 2018

Thankyou for the update Sir!

I would like to just add to this for better understanding, that the equity oriented funds refers to units of Unit Trust of India or a fund wherein investible funds invested by way of equity shares in domestic companies exceed 65% of the total proceeds of such mutual fund.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177824 Points)
Replied 13 June 2018

" a fund wherein investible funds invested by way of equity shares in domestic companies exceed 65% of the total proceeds of such mutual fund" .........Correct.

Explanation.—For the purposes of this clause, 10(38)

"equity oriented fund" means a fund—

(i) where the investible funds are invested by way of equity shares in domestic companies to the extent of more than sixty-five per cent of the total proceeds of such fund; and

(ii) which has been set up under a scheme of a Mutual Fund specified under clause (23D):

Provided that the percentage of equity share holding of the fund shall be computed with reference to the annual average of the monthly averages of the opening and closing figures.