How are growth options of monthly income plans and debt mutual funds taxed?
- Jannarthanan
The growth option of monthly income plans are taxed exactly as debt funds. Tax laws specify that any fund which invests less than 65 per cent in equity should be treated as a debt fund. If you have invested in a growth option of a debt fund and realise your money anytime before three years, then all the gains will be treated as short term capital gains in the year in which you have realised the returns. For example, if you have invested Rs 10 and realised Rs 12 per unit, the Rs 2 gain would be added to your income and it will be taxed according to your tax slab. If you hold it for three years, an indexed gain will be taxed at 20 per cent.
This article was originally published on January 10, 2018.
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