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Capital gains earned on your mutual fund investments are taxed differently depending on whether they are short term or long
term.
LONGTERM CAPITAL GAIN- Capital gains arising on the sale or redemption of units held for a period of more than 12 months
are Long term capital gain
TAX -ON EQUITY ORIENTED FUNDS.- As per current tax laws if the investments are sold after 12 months, there is no tax (these
funds invest typically 65% or more in equity)
TAX- ON DEBT SCHEMES OF MUTUAL FUNDS- These are taxed at 10% without cost indexation or 20% if cost indexation is done.
TAX IS 10% OR 20% + EDUCATION CESS 3% ON TAX AMOUNT+ SURCHARGE OF 10% ON TAX IF INCOME EXCEEDS 10 LAKHS.
WITHOUT INDEXATION - (Sell price- Buy price)* 10.3% without surcharge and 11.33% with surcharge.
WITH INDEXATION - (Sell price -Buy price adjusted for inflation as per index published by govt)*20.6 without surcharge
or 22.66 with surcharge.
SHORT TERM CAPITAL GAINS - on EQUITY SCHEME - 10.3 OR 11.33%
SHORT TERM CAPITAL GAINS - ON DEBT SCHEME- @ Personal income tax rate applicable to you - i.e show it as part of your
income when calculating your income tax.
LONG TERM CAPITAL LOSS - EQUITY - Since income not taxed, loss not allowed for set off.
LONG TERM CAPITAL LOSS - DEBT - Set off only against long term capital gains - carry forward is 8 years after the year
in which loss occurred.
SHORT TERM CAPITAL LOSS - EQUITY OR DEBT- Can be set off against ST or LT gains to the extent possible. Balance can be
carried forward for a period of 8 years after the year in which loss occurred.
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