Mutual Funds

Your Fund Portfolio

Aarati Krishnan | Updated on May 27, 2018 Published on May 26, 2018

Under the new tax rules for MFs, if one holds units of different schemes — some making gains and some losses — will the gains and losses be netted to calculate long-term gains of over ₹1 lakh? Will there be TDS? Is the gain of ₹1 lakh applicable per financial year, or will it be valued on the date of dividend distribution? What will be the taxation for hybrid schemes?

Guljeet Singh Rana

Long-term capital gains (LTCG) tax is only applicable on the gains realised when you sell the schemes. Therefore, if you simply hold on and do not sell, you would not be subject to LTCG. Two, if you sell shares or equity funds held for more than a year, all the gains and losses for the financial year will be clubbed and netted off to calculate your final LTCG. If that final LTCG is more than ₹1 lakh in any financial year, it will be taxed at 10 per cent. For this netting off, all your schemes will be consolidated.

Three, only gains made after January 31, 2018, will be taken into account to arrive at LTCG. Finally, there is no TDS applicable on your LTCG if you are an Indian resident.

Dividends of equity schemes will be taxed at 10 per cent at source. The fund house will pay the tax and remit the remaining dividend to you. Hybrid schemes with equity exposure of 65 per cent or more will enjoy the taxation applicable to equity funds.

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Published on May 26, 2018
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