Categorization of Short term and Long Term Asset:
| Type | Termed as Short–Term If Holding period is: | Termed as Long-term if Holding period is : |
| Equity funds (Note-1) | Less than 12 months | 12 months and more |
| Debt funds (Note-2) | If less than 36 months | More than 36 months |
| Hybrid equity-oriented funds | If less than 12 months | 12 months and more |
| Hybrid debt-oriented funds | Less than 36 months | 36 months and more |
| Equity Shares (Listed) | Less than 12 months | 12 months and more |
| Equity Shares (Unlisted) | If less than 24 months | More than 24 months |
Note-
- Equity funds are those mutual funds whose portfolio’s equity exposure exceeds 65%
- Debt funds are those mutual funds whose portfolio’s debt exposure is in excess of 65%.
Taxation Rates:
| Fund type | Short-term capital gains | Long-term capital gains |
|---|---|---|
| Equity funds | 15% | Up to Rs 1 lakh – Nil Above Rs 1 lakh – 10% |
| Debt funds | Taxed at the investor’s income tax slab rate | 20% with Indexation |
| Hybrid equity-oriented funds | 15% | Up to Rs 1 lakh – Nil Above Rs 1 lakh – 10% |
| Hybrid debt-oriented funds | Taxed at the investor’s income tax slab rate | 20% with Indexation |
| Equity Shares (Listed) | 15% | Up to Rs 1 lakh – Nil Above Rs 1 lakh – 10% |
| Equity Shares (Unlisted) | Taxed at the investor’s income tax slab rate | 20% after Indexation (Resident)
10% without Indexation (Non Resident) |
Query on Mutual Funds redemption and annual Income –
I Invested 25 L in MFs in 2015-16. Now I wish to redeem them- The value now is about 50 L !
So the profit is 25 L
I understand I have to pay Cap Gains tax at 10% of profit of 25L so Cap Gains will be 2.5L.
Balance profit after CG is paid remains 22.5 L
2 Qs –
(a) After payment of 2.5 L Cap gains I transfer the redeemed amount 22.5L into my Savings Bank account, so no new investment was done .
How is this 22.5 L amount treated- ie Do I have to show this Rs 22.5 lac in my annual income for the year FY 23-24!
(b) I am worried if my annual income is over 1 cr- will my tax liability be over 30 % if I add all MFs redemption amounts and other earnings for the year
(c)When do I have to pay the Cap Gains tax- ie immediately on redemption or during the end of financial year 2023-24 ie 31 July 2024
Thanks and regards!
If you have LTCG with 1 lakh profit.
you need to file ITR 2.
There is no tax as LTCG is exempt up to 1 Lakh.