Ask Value Research

Tax on Dynamic Bond Fund returns

If the investments are held for more than three years, the returns qualify for long-term capital gains tax of 20 per cent with indexation benefit

Research Desk

Since Dynamic Bond Funds by definition keeping changing their investment profile regularly, how do we treat the income generated from these funds while filing income tax returns?
- RKM

Dynamic Bond Funds are taxed like any other non-equity (or debt) investment. Returns from investments in debt mutual fund schemes held for less than three years are treated as short-term capital gains and they are added to the income of the investor and taxed as per the applicable slab. If the investments are held for more than three years, the returns qualify for long-term capital gains tax of 20 per cent with indexation benefit.

This article was originally published on October 23, 2015.

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