Taxation of Debt Funds

Is income tax applicable to an individual if he withdraws money from debt fund after one year, say with 10 per cent profit?
-Debabrata Dutta

Yes, tax is applicable on both short-term and long-term gains from a debt fund. If you withdraw investments before completing one-year, the gains will attract short-term capital gains tax payable as per the tax slab. The long-term capital gains on debt funds held for more than a year is liable for long-term capital gains tax. This will be 10 per cent of gains or 20 per cent after indexation of gains plus applicable surcharge and education cess.

This article was originally published on May 09, 2013.