Taxation of balanced funds | Value Research Capital gains on investments in equity-oriented funds held over a year are tax free
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Taxation of balanced funds

Capital gains on investments in equity-oriented funds held over a year are tax free

We know that balanced funds is a mix of debt and equity. So while paying taxes, do we have to pay tax on debt portion and equity portion separately? How does on calculate taxes in case of a balanced fund? Please guide.
- Sumit Pahuja

You are right, balanced funds (or hybrid funds) invest their portfolio in a mix of debt and equity. They can be equity-oriented or debt-oriented, depending on their exposure to equity. If a fund invests minimum 65 per cent in equities, it is called equity-oriented balanced fund. Capital gains on investments in such funds held for more than a year are tax free. Short-term capital gains are taxed at 15 per cent. If a fund is debt-oriented, it is treated as a debt fund for taxation. Short-term gains from such funds are added to the income of the investor and taxed as per the applicable tax slab. Long term capital gains from debt funds are taxed at 20 per cent with indexation benefit.


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