Recently, a few Mutual Fund Schemes revised their Face Value. While in itself, this does not make any change in the value of holdings or returns, the way this change is accounted for by registrars is creating a capital gains tax liability (for Debt/Liquid Funds). The change in face value is recorded as a redemption and re-purchase of the scheme at different NAVs (on teh same day). Since the NAV of purchase (correponding to old FV) is not likely to be the same asNAV of sale, a capital gains/loss accrues. The Capital Gains report from Registrar reflects this Capital Gains. Is Capital Gains tax really payable in this case?
Nash
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