Tax Free Mutual Funds

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If you've sold Tax Free Mutual Funds (like ELSS) and made a profit, your gains might be taxable. While a gain of up to Rs. 1 lakh from such sales is exempt under Section 112A, any amount exceeding this limit is subject to capital gains tax. It's important to consider all your equity and mutual fund sales for the financial year when calculating this limit. You should file your ITR using Form 2 and report these details in Schedule 112A.

sandhya

sandhya (Querist)

23 July 2022 Hi,

I have invested Tax free mutual funds in the year of 2016 , sold in the year of 2021

1 lakh is invested and 52000 odd amount got as a gain,

can you please tell me how to file ITR

is this 52000 is taxable ??
the information is visible under AIS under income tax portal

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

23 July 2022 Rs. 52000/- not taxable, file ITR 2 and fill the details in 'Schedule 112A'

Adv. Ravish Bhatt, ADIT, CIOT

Adv. Ravish Bhatt, ADIT, CIOT (Expert)

26 July 2022 Proceeds from sale of ELSS (popularly known as Tax Free Mutual Funds) are not exempt from taxation and any such proceeds will be taxed once capital gains exceed the limit of 100000 rupees as provided u/s.112A of the Act. In your case total gain from sale of the funds is 52000 and therefore exempt. However, do check-up if you sold any other mutual funds/ equities in concerned financial year, in which case the limit of 100000 has to be seen considering the total gains from sale of different mutual funds or equities.

Author: Advocate Ravish Bhatt
Gmail: ravishdbhatt@gmail.com
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