i had made an investment of Rs. 50,000 in reliance natural resources fund which i switched out to Reliance Growth fund. as on the date of swich-out fund value of Reliance natural resources fund was Rs.47,500/-. Is switching out from one fund to another is regarded as transfer under the Income Tax Act? Do i need to show difference amount of Rs.2500/- as short term/ long term capital loss?
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switching out from one fund to another is Transfer?
Replies (1)
DEAR PRASANNA,
YES IT IS REAGRDED AS TRANSFER AND THE DIFFERENCE IS CHARGEABLE TO CAPITAL GAIN TAX I.E. LT/ ST DEPENDS UPON U'R HOLDING PERIOD.
SWITCHING OVER TO ANOTHER FUND IS JUST LIKE AS REDEMPTION OF UNITS OF OLD FUND AND FRESH INVESTMENT OF THE REDEMPTION AMOUNT IN THE NEW FUND.
THUS, IF THE PERIOD BETWEEN DATE OF PURCHASE OF REL. N.R.F. UNITS AND SALE DATE THEREOF EXCEEDS 12 MONTHS, IT WILL BE REGARDED AS LONG TERM CAPITAL GAIN/LOSS OTHERWISE IT IS A SHORT TERM CAPITAL GAIN/LOSS.
REGARDS,
MANOJ
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