HDFC Mutual Fund has recently changed the face value of HDFC Cash Management Savings Fund (growth). As a result, I need to pay capital gain taxes. My question is:
- Can a fund house change the face value for which the consumer has to pay tax?
- How can I recover the tax from HDFC Mutual Fund?
- Who is responsible for this?
- Can Sebi help me?
- Batsayan Das
HDFC Mutual Fund has changed the face value of HDFC Cash Management Fund - Savings Plan from ₹10 to ₹1,000 per unit from August 30, 2015. Mutual funds change the face value of their schemes to lower the volatility in NAV. Mutual funds are supposed to declare NAV up to four decimal places. With a face value of ₹10, rounding off the NAV from five decimals to four might change the percentage return to the investors and distort the picture. If the face value is ₹1,000, the returns remain intact and real.
Your investment is not affected by this change. When the face value increases, the number of units reduces and NAV increases, but the value of your investment remains the same. You have not gained or lost anything because of this change. You do not need to pay any taxes. Your investment will continue as it is. The date of purchase would remain the same date when you actually bought the units.
This article was originally published on September 07, 2015.
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