I had invested ₹2 lakh in an equity mutual fund in 2005 the current value of which is approximately ₹10 lakh. I am in 20 per cent tax slab. If I redeem the MF units, what will be tax applicable on the redemption amount? How do I show the redemption amount in my Income Tax returns? Will the redemption amount get added to my total income (therefore landing me in 30% tax slab)?
- Anil Pandit
Equity mutual funds do not attract any long term capital gains tax, so your entire gain of ₹8 lakh is tax-free. So if you sell your units after a holding period of a year, then you are liable to pay no tax on your gains. This is irrespective of the tax slab you fall in. You would have had to pay a short term capital gains tax of 15 per cent in case you held your investments for less than an year. You are required to declare all your capital gains under the head "Income from capital gains" while filing your income tax returns.
This article was originally published on January 19, 2015.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
