I purchased a MF during 2007 when the sens*x was on high and now after 3 years lock in period, i am planning to sell now and i could recover only 90% of the amount i invested. Whether the loss can be ofset ?
Ramakrishnaraju (supervisor) (211 Points)
20 February 2010I purchased a MF during 2007 when the sens*x was on high and now after 3 years lock in period, i am planning to sell now and i could recover only 90% of the amount i invested. Whether the loss can be ofset ?
Amir
(Learner)
(4016 Points)
Replied 20 February 2010
Dear ramakrishnaraju,
I think u r talking about ELSS (Equity Linked Savings Schemes)/Tax Saving MF which r eligible u/s 80 C for deduction...........becos they have lock in of 3 years...........
Now the sale would result in Long Term Capital Loss since for MF to qualify for Long term Capital Asset the period of holding should exceed 12 months.............
Since these r equity oriented mutual funds i;e at the time of sale there will be a deduction on account of STT(Securities Transaction Tax) pursuant to which the arising GAINS will be exempt u/s 10(38)
Now, If income from any source is exempt then it's loss cannot be claimed, I mean u cannot setoff with ur other gains, it is a dead loss,,,,,,,,,,,,,,,,
C.Balaji
(Learner)
(1867 Points)
Replied 20 February 2010
Yes Mr.Amir is rite....
Long Term CG on sale of shares is exempt from tax...
and therefore it's loss cannot be set off against any income...
Vidya
(Service with a reputed CA firm)
(75 Points)
Replied 03 March 2010
hello amir sir,
The mutual funds which Mr. Ramakrishnaraju is talking may not be necessarily ELSS. Even other MFs say growth funds etc. do have a lock in period..
CAclubindia
