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Taxation on FMP Gains

Gains realized from debt funds having tenure of less than 3 years are considered as short term capital gains

I had invested ₹2 lakh in DSP Blackrock FMP series 154 with 12.5 months maturity on March 25, 2014. It matured on April 6 2015.
- What is tax applicable? (I am in 10% bracket)
- What is the rule now with respect to double indexation? Can I get the benefits or is there any other option like extending the period incase double indexation is not available.

- Navin Nayak

The gains you make on the NAV of the fund will be treated as short term capital gains and you will have to pay tax on it at 10 per cent, your tax slab rate. Gains realized from debt funds having a tenure of less than three years are considered as short term capital gains according to current tax laws, which came into effect last year. You cannot avail double indexation benefits due to the change in tax laws.

An investor cannot extend his term in a closed-ended fund. However, the AMC may choose to roll over the fund and extend its maturity. In such a case, the fund will write to you asking if you would like to rollover. You can opt for rollover if you don't need the money immediately. It is also tax efficient to rollover FMPs so that your holding period is at least 3 years.

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