I had purchased units of HDFC Liquid Direct-G worth ₹5 lakh a year back. Now the fund is subject to short term capital gains if sold within three years. I want to merge if this fund with HDFC Equity Direct-G so I can sell after 1 year from now without any tax liabilities. Is it possible?
- Aditya
No, you cannot merge two fund holdings. A merger decision can be taken only by the fund house and usually it is between two schemes with similar objectives. If you are comfortable with equity investing, you can use a systematic transfer plan to move money from the Liquid Fund to the Equity Fund. Here, your transfers will still be considered as redemptions from HDFC Liquid and will be added to your taxable income. Else you must hold your liquid fund for three years to reap the benefits of long term capital gains tax.
This article was originally published on May 20, 2015.
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