How are ultra short-term funds taxed?

I recently redeemed units of FT ultra short term bond and got around ₹10,000. I also got my capital gains tax statement to see my tax liability. Short-term gains are shown as ₹450, but it also shows ₹0 as tax liability in both with indexation and without indexation and also zero in TDS column. Should i declared this gain while submitting Form 16 next year or this gain is tax free? Please clarify how taxation of debt funds works.
- Ajaybabu O M

If you make a profit on your debt fund (Ultra Short term bond) investments that you have held for less than 36 months (3 years), it will be treated as short term capital gains. The short term capital gains are added to the income and taxed as per the income tax slab applicable to the investor. You will have to declare this gain under "Capital Gains" while filing your income tax returns.

This article was originally published on April 13, 2016.