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ELSS Tax Implications

ELSS funds have a tax-free status on redemption after the stipulated lock-in period…

I had invested in Magnum Taxgain in 2006 and have recently redeemed all the units. Kindly tell me if the total amount is taxable in the current financial year and if I invest the redeemed sum into any other equity mutual fund what will be the tax treatment?
- Vijay Lanjewar

The equity linked savings scheme (ELSS) is a tax-saving mutual fund with a 3-year lock-in. It also has a tax free status on redemption after the stipulated lock-in. So, your redemptions do not attract any tax.

Investments in equity mutual funds attract tax based on the holding period. If you hold on to your investment for less than a year, short-term capital gains will be applicable at a flat 15 per cent. If the holdings are for more than a year, there will be no tax as they would qualify as long term capital gains, which is tax free if the holding is for more than a year.

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