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Tax Implications on Plan Switches

Switching between plans of the same mutual fund scheme is treated as redemption & purchase...

What are the income tax implications in case of a switch between different plans of the same mutual fund scheme?
- Ajay Gupta

A switch between plans of a mutual fund is treated as a redemption and new purchase. Hence, if your holdings are less than a year old, the earnings will be subject to short-term capital gains tax in case of equity funds, and added to your taxable income in case of debt funds. If the units have been held for more than 1 year, the earnings will be tax free in case of equity funds, and taxed at 10 per cent flat or 20 per cent after indexation in case of debt funds.

This article was originally published on March 18, 2013.

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