I have invested some money in liquid funds. What will be the tax implications if I redeem my investments after 1 year? Also tell me about the tax treatment of gold ETFs.
-P.S. Jain
The tax treatment of any debt mutual fund and that of gold ETFs is the same. There is a clear demarcation in our tax laws that the long-term capital gains are tax-free for any investment where you’ve to pay securities transaction tax (STT). Where the STT is not to be paid, the gains are added to your taxable income. In case of liquid funds and gold ETFs, gains earned on investments held for over 1 year will be treated as long-term capital gains. These gains are taxed at the rate of 10 per cent without indexation or 20 per cent with indexation; the selection of either method is your choice.
This article was originally published on April 26, 2012.
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