Tax queries on mutual fund investment

Tax queries 426 views 3 replies

Dear friends and colleagues, I have 2 queries regarding Mutual Fund investment and would be really thankful if you can clarify them.

1) I had 8 Mutual Fund accounts which were purchased more than 5 years back. I redeemed the MF accounts, and STT was deducted and the amounts were credited in my bank accounts. I now want to put the redeemed amount in fresh MF accounts the entire proceeds in my name and my father's name as nominee so that these MF accounts can be dematted and put in my existing demat account. 

Now, my doubt is, since I have invested in MFs(which I propose not to redeem for another 3 years), I would like to know whether the sale proceeds will be added to my income and attract income tax eventhough they are already STT paid.

2) I have already saved tax for 1.5lakhs by investing in PPF. I further want to invest in MFs additional amounts which I do not propose to encash for another 3 years. i would like to know whether the above investment will also attract income tax. 

Thanks a lot.

Replies (3)

1.If the MFs are equity oriented(65 % or more invested in indian domestic companies) which you     had sold then sale proceeds are exempted since you had hlod for more than 12 months.  

 

2. If MFs are other than equity oriented fund then it will attract long term capital gain of 20% with indexation benefit. As per Finance Act(no.2) 2014 any MF other than equity oriented fund held for more than 36 months will become long term capital asset. 

 

3.Re-investing in MFs do not exempt from attracting capital gain where it  is applicable. Therefore the above investment will included in your income if investment is made in fund other than equity oriented fund.

 

Are there any tax exemptions for investing in shares/equities also?

 

Thanks in advance.

Not in shares/equity but in bonds issued by REC/NHAI upto 50 Lakhs. You have to acquire these bonds within 6 months from the date of transfer. Further these bonds should not be transferred for next three years.


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