Fundamental questions in MF

[pavvu_kk]

Hi All,

I have a couple of fundamental questions on MF. Pls help me in understanding these better:

1. If I buy a MF today (not a ULIP, not ELSS but a pure MF), can I sell it tomorrow? Though it may not make sense logically but is it possible technically?

2. How much tax will I be charged if I sell my MF within 1 year and after 1 year? Is it the same as in direct equities?

3. Typically, what are the switching charges in a MF (not ULIP)?

4. Can I buy 1 MF and keep pumping money into it as and when I want? If yes, what are the tax implications? For example, I buy a MF today for 50K. Then after, say, 370 days I put 50K more into the same MF. If sell this MF the next day how will I be taxed? Will the taxation be different for my first 50K and second 50K?

TIA
Pavan

 

[bandlab2]

see my answers in bold

Hi All,

I have a couple of fundamental questions on MF. Pls help me in understanding these better:

1. If I buy a MF today (not a ULIP, not ELSS but a pure MF), can I sell it tomorrow? Though it may not make sense logically but is it possible technically?

Yes it is possible thru online buy/sell. u can do this rom any online boker or from the MF website. but be aware of tax implications

2. How much tax will I be charged if I sell my MF within 1 year and after 1 year? Is it the same as in direct equities?

3. Typically, what are the switching charges in a MF (not ULIP)?

within the same fund house, no charges. but STT is chaged

4. Can I buy 1 MF and keep pumping money into it as and when I want? If yes, what are the tax implications? For example, I buy a MF today for 50K. Then after, say, 370 days I put 50K more into the same MF. If sell this MF the next day how will I be taxed? Will the taxation be different for my first 50K and second 50K?

you can keep adding to existing folio. each addition is treated as a seperate purchase

TIA
Pavan

 

[lonsharim]

Hi All,
1. If I buy a MF today (not a ULIP, not ELSS but a pure MF), can I sell it tomorrow? Though it may not make sense logically but is it possible technically?

Other MF investments unlike ELSS don't have lock in period of 3 years and you should be able to sell them when ever. You may be charged exit load on short term investments.

2. How much tax will I be charged if I sell my MF within 1 year and after 1 year? Is it the same as in direct equities?

Short term Capital Gain will apply for any sale inside one year and Long Term Capital Gain will apply for any sale over a year. The percentage of taxation differs on which type of Mutual Fund it is. An equity based MF has different taxation rates to a debt MF.

3. Typically, what are the switching charges in a MF (not ULIP)?

I don't understand the relevance of switching here. You have invested into a fund with a specific mandate and there is no rejigging of the portfolio. You could redeem some of the units of your scheme and put it in another scheme of the same fund house. For instance, check out details for Systematic Withdrawal Plans

4. Can I buy 1 MF and keep pumping money into it as and when I want? If yes, what are the tax implications? For example, I buy a MF today for 50K. Then after, say, 370 days I put 50K more into the same MF. If sell this MF the next day how will I be taxed? Will the taxation be different for my first 50K and second 50K?
TIA
Pavan

Yes, the taxation on the number of units purchased last year will differ from the taxation on the units bought yesterday. The principles of STCG and LTCG will apply.

 

[pavvu_kk]

Thanks a lot folks for the clarifications.

Could you pls let me know where can I find the current STCG and LTCG taxation rates?

Thanks

 

[lonsharim]

Section 10(38): Under Section 10(38) of the Act, long-term capital gains arising from transfer of a unit of mutual fund is exempt from tax if the said transaction is undertaken after October 1, 2004 and the securities transaction tax is paid to the appropriate authority. This makes long-term capital gains on equity-oriented funds exempt from tax from assessment year 2005-06.

Short-term capital gains on equity-oriented funds are chargeable to tax @15% (plus surcharge plus education cess). However, such securities transaction tax will be allowed as rebate under Section 88E of the Act, if the transaction constitutes business income.

Long-term capital gains on debt-oriented funds are subject to tax @20% of capital gains after allowing indexation benefit, or at 10% flat without indexation benefit, whichever is less.

Short-term capital gains on debt-oriented funds are subject to tax at the tax bracket applicable (marginal tax rate) to the investor.

 

[pavvu_kk]

Thank You.

 

[srinivas.nukala]

hai
Is there any real logic or advantage in adopting ATST strategy in MF?
If so tell all of us.
srinivas

 

[nsuresh_rasr]

Srinivas,

Wht is ATST strategy means??

Thanks
Baba

 

[srinivas.nukala]

ATST means ACQURE TODAY AND SELLING TOMORROW
THANK YOU

 

[nsuresh_rasr]

Thank you Srinivas.