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Debt/Liquid Fund Tax Calculation.

Assuming that one is investing in Liquid Funds/Debt Funds and Say does a STP into a Equity MF, how would the Tax be calculated?

 

Ex: 

 

Month 1 – Invest 1Lakh in Liquid Fund – NAV 100, 1000Units

Month 2 – STP 10K into Eq Fund – Exit NAV 120, 84 Units

Month 3 – STP 10K into Eq Fund – Exit NAV 110, 90Units

Month 4 – STP 10K into Eq Fund – Exit NAV 90, 111 Units

Month 5 – STP 10K into Eq Fund – Exit NAV 80, 125 Units

Month 13 – STP 10K into Eq Fund – Exit NAV 120, 84 Units

Month 14 – STP 10K into Eq Fund – Exit NAV 120, 84Units

How will the Tax be calculated in this case? Meaning how to calculate the Gain/Loss? If investing in Lumpsum and exiting in Lumpsum, its pretty clear. Get the Difference using NAVs and Units. Is it the same way here as well? 

 

For Month 2, the Tax would be : 

Difference of (Sell NAV – Buy NAV) * No. Of units Sold = 

(120 – 100)*84 = 1680, so 20% Tax = 336Rs.

 

For Month 5, the Tax would be : 

Difference of (Sell NAV – Buy NAV) * No. Of units Sold = 

(120 – 100)*84 = -1680, so i can show this as a loss?

 

similarly for others as well, except after Month 13, the Tax rate will be 20% with indexation etc.

 

Is this correct? Also, when do people typically start the STP? Because, if the STP is started soon after one invests in a DEbt/Liquid fund there might be Exit load that is applicable as well.

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