Captial gains on mutual funds

1. a)For sale of mf units from an equity oriented scheme (held for more than 12 months), how to determine whether STT has been paid or not? OR is STT deducted by default and hence all redemptions from equity oriented scheme are exempt? b) If the above is chargeable under CG, whether indexation benefit is available for the same. c) What is the rate of CG tax to be charged on the above transaction?

2. a) For sale of units from a debt oriented fund (held for more than 12 months), if after indexation, there is a LT capital loss, can the loss be carried forward OR is STT required to be paid for carrying forward the loss? b) How to determine if STT has been paid or not?

3. Does the following amount to transfer? a) Switching units from one equity scheme to another equity scheme? b) switching units from debt scheme to equity scheme? c) Switching units between schemes through a Systematic transfer plan?

Please quote the relevent sections based on which you give the answers.

Thanks.

Dear Peter,

Capital gain on sale of all equity oriented funds, which are held for more than one year is exemped from income tax. Hence no indexation is required.

In the sale of units in debt mutual fund held for more than 12 months , the gain used to be considered as long term capital gain before this year's budget was prounced. The holding period has now been changed to 36 months from initial 12 months. Gain on sale of units which are held for less than 36 months is considred to be short term capital gain and taxed accordingly.

Yes the LT capital loss in the sale of these funds can be carried forward.

No STT is deducted in sale of any debt funds. It is only deducted in sale of equity funds.

3. Does the following amount to transfer? a) Switching units from one equity scheme to another equity scheme? b) switching units from debt scheme to equity scheme? c) Switching units between schemes through a Systematic transfer plan?

SWITCH in any funds, debt or equity, is equivalent to sale of units and all tax implications arise when you do this.

Sorry I am not a CA and can not give you relevent incometax clause. But I have been investing in Equity and debt funds for last more than 10 years and hence this info.

Trust this would have helped.....

Uteesh Dhar

uteesh @ yahoo.com