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Income Tax on Mutual Fund SIP-------Can Anyone reply this in this Forum please.

Kr R (JOB) (88 Points)

24 September 2009

Can Anyone reply this in this Forum please.

How to know whether a particular MF bought under SIP attracts Income Tax or Not on its redemption.

Bought Following Mutual Funds under SIP. If I sale it today, Will there be any income tax payable or Not as these should be treated as Long Term Capital Gain (STT paid by icicidirect). -- Please Clarify.

Plan Type - Investment

1. SUNDARAM BNP PARIBAS SELECT MIDCAP - GROWTH (Rs. 2000 started Jan'07 - 12 months)

2. HDFC EQUITY FUND - GROWTH PLAN (Rs. 1000 started Jan'07 - 12 months)

3. RELIANCE VISION FUND - GROWTH PLAN - GROWTH OPTION (Rs 1000 started Jan'07 - 12 months)

4. ICICI PRUDENTIAL INFRASTRUCTURE FUND - GROWTH (Rs 2000 started Jan'07 - 6 months)

Please clarify on redemtion how much tax I have to pay.

Regards,

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Juzer Sadikot (CA - innovative solutions for Imports an) (1309 Points)
Replied 24 September 2009

Dear Mr. K R.

The LTCG on above SIP MF shall be exempted from tax under section 10(38).

My openion is based on applicability of STT on certain securities.

Only equity oreinted units are require to charge STT on

i) In case of open ended funds, at the time of sale/reedemption.

ii) In case of close ended funds, at the time of purchase and sale (close ended funds are require to list thier units compulsory)

In view of above, assuming that the AMC (Asset Management Companies) are well equiped with the STT law prevailing and so charged STT understanding that the Fund is equity oriented fund for income tax purpose as defined under explaination of 10(38), the LTCG shall be exempted from tax.

I shall find the exact text containing above provisions if possible.

Thanks