Is there anything like arbitrage balance fund?
- Sudhir Apte
We believe you are referring to equity income funds. These schemes invest in a combination of direct equity, equity arbitrage and debt. The direct equity and equity arbitrage investment is kept above 65 per cent to qualify as equity mutual funds for the purpose of taxation. Long term capital gains tax is nil on equity investments held over a year. These schemes were launched after the finance minister changed the taxation norms for debt mutual funds in 2014. Earlier, debt mutual funds used to qualify for long-term capital gains tax after a year. Now, debt funds should be held for more than three years to qualify for long-term capital gains tax of 20 per cent with indexation benefit.
This article was originally published on December 30, 2015.
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