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

Mr. Sanjay Mehta bought units of a debt mutual fund (specified mutual fund, acquired after 1 April 2023) for Rs 5,00,000 and redeemed them after 3 years for Rs 6,50,000. He is in the 30% slab. Under the provisions that treat such gains as short-term regardless of holding period, ignoring cess, what is the tax on the gain?

The tax is Rs 45,000. Gains on specified debt mutual funds acquired after 1 April 2023 are deemed short-term and taxed at the slab rate regardless of holding period. The gain of Rs 1,50,000 at 30% gives Rs 45,000.

  1. ARs 45,000Correct
  2. BRs 18,750
  3. CRs 30,000
  4. DRs 37,500

Explanation

For specified mutual funds acquired after 1 April 2023 (and redeemed before the July 2024 change), gains are deemed short-term and taxed at slab rate. Gain = Rs 1,50,000; at 30% = Rs 45,000. Rs 18,750 uses 12.5% and Rs 37,500 uses 25%.

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