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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Taxation of Other Products

Caselet: Rohan, a resident individual, redeemed units of a debt mutual fund (purchased after 1 April 2023, specified mutual fund) for a gain of Rs 3,00,000 after 4 years. His total taxable income otherwise places him in the 30% slab (ignore surcharge and cess). What is the tax on this gain under the rules taught at this level?

The tax is Rs 90,000. Gains on specified debt mutual funds bought after 1 April 2023 are deemed short-term and taxed at the investor's slab rate, here 30%, regardless of holding period and without indexation. 30% of Rs 3,00,000 equals Rs 90,000.

  1. ARs 30,000 at 10% as long-term gain
  2. BRs 60,000 at 20% with indexation
  3. CRs 90,000 at slab rate of 30%Correct
  4. DNil, because the holding exceeds 3 years

Explanation

Specified mutual funds bought on or after 1 April 2023 are taxed as short-term gains at slab rates irrespective of holding period, with no indexation. 30% x Rs 3,00,000 = Rs 90,000. The 10% and 20% options apply to other asset classes, and no exemption exists for holding beyond 3 years.

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