VR Logo

Equity Fund Mandate

Confusion over tax status of an equity fund can sometimes arise

I had invested in Reliance Vision Fund more than a year back. For a fund to qualify as an equity fund, it has to keep at least 65 per cent of its assets in equities, but according to the offer document of this fund, it has to keep only 60 per cent of its assets in equities. Will the gains be tax-free if I redeem now?

- Suman Chatterjee

You are right in your understanding that a fund has to invest a minimum of 65 per cent in equities so as to qualify as an equity fund. But this 65 per cent has to be arrived at by taking the opening and closing monthly equity allocation in the trailing one year period.

Reliance Vision, according to its mandate, invests 60 to 100 per cent of its assets in equity. It is structured to behave like an equity fund and thus maintains the required allocation of 65 per cent. This fund is treated as an equity fund only and hence, you need not worry on your long-term gains being tax-free.

Post Your Query