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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Taxation

Meena redeemed units of a non-equity (debt) mutual fund purchased after 1 April 2023 (specified mutual fund) after holding them for 5 years, realising a gain of Rs 3,00,000. She is in the 30% slab. How is the gain taxed, ignoring surcharge and cess?

The tax is Rs 90,000. For debt funds purchased after 1 April 2023 that qualify as specified mutual funds, gains are deemed short-term whatever the holding period and taxed at the investor's slab rate, here 30% of Rs 3,00,000.

  1. ARs 90,000, as the gain is deemed short-term and taxed at slab rateCorrect
  2. BRs 60,000, as long-term at 20% with indexation
  3. CRs 37,500, as long-term at 12.5% without indexation
  4. DNil, as holding exceeds 3 years

Explanation

Specified mutual funds (up to 35% in equity) bought on or after 1 April 2023 are taxed as short-term capital gains irrespective of holding period, at slab rate. Tax = 30% x 3,00,000 = Rs 90,000. The indexation and 12.5% options do not apply to such units.

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