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capital gain on redemption of mutual fund

Sowmya.S.Balan (Paid Assistant) (749 Points)

30 April 2011

Dear friends,

I would like to know about taxability of capital gain (long term & short term ) on redemption of mutual fund. please give me a reply

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3 Replies

kuldeep singh (TAX CONSULTANT ) (35 Points)
Replied 22 May 2011

No capital gain on redemption of mutual fund. income from redemption of mutual fund chargable in THE HEAD OF B&P INCOME. and case in indu- income from redemption of mutual fund chargable in othere sources.

CS,CA F,Numrologi TusharSampat (CS CA F Numerologist Astrologer Graph) (85935 Points)
Replied 22 May 2011

Its taxable as income frm other sources n nt under capital gain head.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 23 May 2011

APITAL GAINS

LONG TERM CAPITAL GAINS

LTCG From Equity Schemes

LTCG from Non Equity Oriented Schemes

i) Without Indexation -10%

ii) With Indexation – 20%

If holdings period ? 12 months, then Short Term Capital Asset, Otherwise Long Term Capital Asset (Section 2(42A) in respect of all MF schemes.
In case of individual/ HUFs being residents , where the Total Income, excluding Short Term Capital Gains, is below the maximum amount not chargeable to tax, then the difference between the current maximum amount not chargeable to tax, and total income excluding Short Term Capital Gains, shall be adjusted from capital gains. Therefore, only balance STCG will be liable to income tax at the rate of 15%.
In respect of short term capital gains arising to non resident individual unit holders, the Mutual Fund is required to deduct tax at source @ 15% +SC+EC, in case of Equity Funds and @ 33.99% (30% +SC+EC) in case of non equity schemes.
- No tax needs to be withheld from capital gains arising to a FII (section 196D)
- In respect of STCG arising to Foreign Companies (Other than FIIs and Overseas Financial Organisation but including OCBs), the fund is required to deduct tax at source @ 42.23% (40%+SC+EC)
- Equity Oriented Scheme – NIL [S.10(38)]
- However, companies are required to include such long term capital gains in computing the Book Profit and MAT liability under S.115JB
- Further in case of Individuals/HUF, being residents, where the Total Income excluding LTCG is below the maximum amount not chargeable to tax, then the difference between the maximum amount not chargeable to tax and Total Income excluding LTCG, shall be adjusted from LTCG. Therefore, only the balance LTCG will be liable to be taxed @ 10% or 20% .
- As per the provisions of Section 115AB of the Act, LTCG on transfer of units arising to specified overseas financial organizations, being companies, on transfer of units purchased by them in foreign currency shall be liable to tax @ 10.5575% (i.e. 10% +2.5%SC+EC). No indexation benefit is available to S.115AB entities.
- If section 115AB entity is other than company, tax shall be chargeable at the effective tax rate of 11.33% (10%+SC10%+EC).
- LTCG arising to FII (being company) shall be taxed @ 10.5575% (10%Tax +2.5%SC+3%EC)
- LTCG arising to FII (non company)-11.33%