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

Under current rules, how are capital gains on units of a specified mutual fund (debt fund investing not more than 35% in domestic equity) purchased after 1 April 2023 taxed?

Gains on specified mutual funds (debt funds with up to 35% in domestic equity) bought after 1 April 2023 are deemed short-term capital gains and taxed at the investor's slab rate regardless of holding period, with no indexation benefit.

  1. AAs long-term capital gain at 20% with indexation
  2. BAs short-term capital gain at the investor's slab rate regardless of holding periodCorrect
  3. CAs long-term capital gain at 12.5% after 24 months
  4. DExempt if held for more than 36 months

Explanation

Section 50AA treats gains on specified mutual funds acquired on or after 1 April 2023 as short-term capital gains, taxed at slab rates irrespective of holding period. Indexation and long-term treatment are not available.

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