How is capital gain taxed in debt funds? | Value Research Short-term capital gains from debt mutual funds are added to your income and taxed accordingly
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How is capital gain taxed in debt funds?

Short-term capital gains from debt mutual funds are added to your income and taxed accordingly

If I invest lump sum amount in a liquid fund/short term debt fund and withdraw the money in three to six months, what would be the tax on short term capital gain and how do I pay it? Or it will be deducted during redemption? Also, if I invest in long term debt fund for more than three years, what would be the tax on long term capital gain? Also, what would be the taxable amount if I withdraw it before three years?
--Subhro Dey

Capital gains on redemption in liquid funds in three to six months will be added to your income and taxed as per the applicable income tax slab. You need to show it as income while filing ITR. It will not be taxed automatically. It is the responsibility of the investor to pay tax on capital gains.

Current taxation on non-equity investments is given below:

Investment holding periodTaxation
Short Term Capital Gain36 months or lesseradded to income and taxed as per applicable slab rate
Long Term Capital Gainmore than 36 months20% with indexation



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