Should I declare capital gains for switching funds? | Value Research Switching funds is treated as redemption from the existing scheme and a fresh purchase in the new scheme
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Should I declare capital gains for switching funds?

Switching funds is treated as redemption from the existing scheme and a fresh purchase in the new scheme

Assume that I have invested ₹10,000/- in X Fund In Jan 2015 and the current value is ₹13,000. Since its not performing well I have decided to switch the investment to another fund within the AMC. As we all know a switch is considered a fresh investment.
My questions is should I declare the capital gains of ₹3,000 while filing tax returns since I have taken the money out within a year?

--Bhushan R S

From taxation point, a switch is treated as a redemption from the existing scheme and fresh purchase in the new scheme. Since you have redeemed your investments before the completion of 12 months, your gains would be considered short-term capital gains. You must declare it while filing this year's income tax return. Short-term capital gains in equity-oriented schemes are taxed at 15%.


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