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TAXABILITY OF MUTUAL FUND SWITCH

RANJAN MEHTA (Chartered Accountant) (589 Points)

28 May 2010

IF I SWITCH OVER FROM ONE SCHEME TO OTHER SCHEME OF THE SAME MUTUAL FUND WHETHER THE SAME WILL BE TAXABLE? WHETHER THE SAME WILL BE TREATED AS SALE AND WILL BE LIABLE FOR CAPITAL GAINS?

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8 Replies

CA Ayush Agarwal (Kolkata-Pune-Mumbai) (27186 Points)
Replied 28 May 2010

Yes,Provided all LTCG & All Sections are Applicable.

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Rahul Gupta (Project Controller ACA MBA(Fin.)) (8019 Points)
Replied 28 May 2010

Agreed, it willl be treated as sale and acoordingly, Capital gain will be calculated.

RANJAN MEHTA (Chartered Accountant) (589 Points)
Replied 28 May 2010

Originally posted by : Rahul Gupta
	Agreed, it willl be treated as sale and acoordingly, Capital gain will be calculated.

sir,

if u can give any reference of section or any caselaw pls.

Deepak Tapse (Accounts Manager - Taxation) (1771 Points)
Replied 28 May 2010

Yes, if you have swithed before 1 year, then STCG will applicable,

Rahul Gupta (Project Controller ACA MBA(Fin.)) (8019 Points)
Replied 28 May 2010

Mr Mehta

Check this link may it provides you some provisions...

/forum/taxability-of-amount-from-mutual-fund-82848.asp

Regards

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Gopalakrishnan Mahalingam (Article Assistant) (282 Points)
Replied 18 June 2015

Under which section switch over is taxable? Can anyone please explain?

Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 18 June 2015

Switch over from one scheme to another is as good as withdrawal of funds and reinvested in other scheme. Therefore, same would deemed to be as sale of MF units. The period of holding units under old scheme is important to determine whether its a short term or long term capital gain and taxed accordingly. Switching to other scheme after a year would be deemed to LTCG, STT would be payable thereon even on switching and all LTCG would be exempt under Income tax act. Short term capital gain would be taxed @ 15%

Hope this solves your query.

Thanks and Regards,

Manoj B. Gavali

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Rashi Bajaj (CA) (752 Points)
Replied 18 June 2015

By making a switch from one scheme to another, you are relinquishing your right over the former investment. This is treated as "transfer" for the puropose of capital gains. Depending upon the term of investment, LTCG/STCG will be applicable.

Regards.

1 Like