Mutual Funds Switch-in and effect of short term / long term gain

POSTED BY Ashish Garg ON March 6, 2013 6:13 pm COMMENTS (6)

Hi,

 

I had purchased some units of Kotak Mid Cap fund through SIP in April 2010 to March 2012 and accumelated 1564.736 units. In between I moved value worth 1000 units to Kotak Gold Fund and purchsed 1812.36 unit (Valued Rs.23582) in Nov 2011. Balance units that were in my Kotak Mid cap account (564.736) were redeemed in Dec 12 and all units in Kotak Gold Fund were also redeemed at the same time.

 

How do I compute the short and long term gain on the same for the purpose of income tax.

Looking forward to your help.

 

6 replies on this article “Mutual Funds Switch-in and effect of short term / long term gain”

  1. Dear Ashish, the gold fund units are classified as debt funds for taxation purpose & hence the zero tax after 1Y holding is not available. The zero tax status is only for funds where Eq. component is either 65% or more than that all the time.

    Thanks

    Ashal

    1. Ashish says:

      Dear Ashal,

      Thanks. Now I am clear and can calculate the tax. Have already allocated some amount aside considering the impact of redemption.

      Regards,

  2. Dear Ashish, here I’m trying to answer you.

    Midscap units sold by you to switch to Gold fund in Nov 2011 – Out of total 1000 units, the units purchased by you till Oct 2010 are eligible for LTCG & hence no tax. (check for Nov 2010 units also if date wise it completes 1Y or not).

    The Midcap units less than 1Y holding were eligible for STCG or STCL as the case may be but it’s now not beneficial to discuss as the FY 2011-2012 is over.

    The total sell out of Midcap Units in Nov 2012 – again check the 1Y holding & gains if any are tax free & for holding less than 1Y, gains if any are to be taxed @ 15.45%. If there is any STC Loss the same is to be adjusted against STCG.

    For Gold units, again check the holding period, If it’s less than 1Y, the gains if any are STCG & losses are STCL. For anything more than 1Y, the gains if any are LTCGs & losses if any are LTCL. For gold units, STCGs ‘ll be added into your income of this FY & taxed @ slab rate. LTCGs ‘ll be taxed @ 10.3% with out indexation or 20.6% with indexation.

    thanks

    Ashal

    1. Ashish says:

      Dear Ashal,

      Thanks.

      Just a small clarification here, does units held in God Fund will not be eligible for a Zero tax as part of Long Term Capital Gain (holding period more than a year) or it is only for equity related fund and not God funds.

  3. You need to know which 1000 units (date of purchase) were moved in Nov 2011.
    No LTCG for units purchased 1 year prior to move. STCG for those purchased less than a year and taxed as per income slab.

    Same for redemption in Mar. 2012 in Mid-cap

    Redemption from Gold fund: 10% or 20% with indexation

    See this to calculate

    http://www.tflguide.com/2010/03/fixed-deposit-vs-fixed-maturity-plan.html

    1. Ashish says:

      Dear FFC,

      Thanks.

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