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How are gains from equity taxed

Each SIP is considered a separate investment when calculating capital gains tax...

I want to invest Rs 2,000 per month via SIP in Franklin Pharma fund for five years. What will be the tax implication if I redeem after that.
- K C Patel

Franklin Pharma fund was merged into Franklin India Prima Plus in 2011. Now, Franklin India Prima Plus is a four star rated equity oriented large and mid cap fund.

If you redeem your investment after five years, the gains will not be taxed. Gains from equity after 12 months are long-term capital gains and tax-free.

However, it is important for you to know that the 12 months period will apply separately to each SIP. If you start investing from March 01, 2013, your last SIP will be paid on March 01, 2018. You will have to wait till Feb 28, 2019 to receive tax free gains from all SIPs. If you redeem before that, you will have to pay short-term capital gains tax at 15 per cent plus three per cent cess on the gains from the SIPs which have not completed 12 months.

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