Tax on Sale of Mutual Fund | Value Research Prior to the last budget, mergers were considered fresh purchase. But they are now tax-neutral
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Tax on Sale of Mutual Fund

Prior to the last budget, mergers were considered fresh purchase. But they are now tax-neutral

I have purchased 1955.99 units of Reliance Natural Resources Fund through the NFO for the ₹20,000 in 2008. The scheme was merged with Reliance Vision fund in 2013 and I was allotted 71.571 units at NAV of ₹223.7748 with a total value of ₹16015.84. I sold these units on 14/05/2013 at NAV of ₹319.52 and got ₹22,868.45. Please guide me whether I have to pay any Income Tax on this transaction.
- Haresh Pancholi

Before the provision in the last budget made mergers of mutual funds tax-neutral on investors from April 2015, mergers were considered redemption from one fund and purchase into another. You need not pay any tax at the time of the merger, as you have held the units of Reliance Natural Resources Fund for more than a year. However, since you have sold the units of Reliance Vision in less than year, you will have to pay short-term gains tax of 15% which works out to around ₹1,028.


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