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Tax Treatment of Balanced Funds

As far as taxation is concerned, balanced funds are treated like equity funds. Hence, long-term gains are tax-free

I had invested in HDFC Balanced Mutual Fund. Recently I withdrew part of my investment after a year. I understand that the returns from equity oriented mutual fund which are invested for more than a year are tax free whereas the returns from debt oriented mutual fund are taxable. But how are the gains from a balanced fund taxed?
- Vivek Vachhani

Balanced funds are hybrid funds investing anywhere between 65 to 80 percent of their portfolio in equity. Tax treatment of balanced funds is the same as that of equity funds, provided they have over a 65 per cent equity allocation. As you have redeemed after completion of an year, capital gains will not be taxed. However, had you redeemed before one year from date of purchase, short term capital gains would be taxed at rate of 15 percent.



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