income tax on capital gains of MF

#1
Dear financial gurus,

I have some confusions as under:

We redeem MFs with some capital gains. If we redeem within one yr capital gain @10% is deducted at source + some cess etc totalling about 12-15% in total. When we redeem after one year only cess 2-5% is deducted. I learnt this from discussions only.

Now, r we supposed to pay income tax on the capital gains that accrue through out the financial year?

If so, how do you keep track as to how much you have earned because we keep redeeming/investing on and off. Moreover, if we pay 30% tax on the income earned through MFs then the total tax [tax on capital gains, cess etc + income tax] we end up paying somethng like 45%??

I shall be grateful for advice/comments of financial gurus on the above.

Thanks

Kaushal
 
#2
Dear financial gurus,

I have some confusions as under:

We redeem MFs with some capital gains. If we redeem within one yr capital gain @10% is deducted at source + some cess etc totalling about 12-15% in total. When we redeem after one year only cess 2-5% is deducted. I learnt this from discussions only.

Now, r we supposed to pay income tax on the capital gains that accrue through out the financial year?

If so, how do you keep track as to how much you have earned because we keep redeeming/investing on and off. Moreover, if we pay 30% tax on the income earned through MFs then the total tax [tax on capital gains, cess etc + income tax] we end up paying somethng like 45%??

I shall be grateful for advice/comments of financial gurus on the above.

Thanks

Kaushal
Hello!

I wil try 2 answer. Any MF which invests >65% in equity is labelled as Equity MF.
LTCG (gain obtained by selling MF units which were held > 365 days) carries no tax liability at our hands.
STCG (if the same is held < 365 days) carry 15%+cess as tax.
There is no provision for assessment of gains 'accrued'.
Calculation of gains depends on date of purchase & date of selling!

mr india
 
#3
Dear Mr. India, Sir,

Thank you for your response. You have cleared my query about LTCG/STCG.

My another confusion is about income tax on incomes earned by selling MFs. Suppose I earned income of 3 lakh in 2009-10 by selling MFs. Now will this 3 lakh will again be taxed by way of Income Tax [when filing income return for the year]?

Thanks in advance for clearing my confusion.

Kaushal
 
#4
Hi,
U have not clarified whether its LTCG or STCG?
Suppose I earned income of 3 lakh in 2009-10 by selling MFs.
Considering that u r talking about LTCG; these 3lac wont attract any tax. U wil show this in appropriate column in ITR.
One thing more- if these 3lac lie in ur saving acc or some other venture, the interest gained on this amount wil be taxed accordingly.
Hope i cleared the air!

mr india
 
#5
Thank you, again, Sir.

What I understood is:

There is no tax on the gains from MFs except LTCG/STCG.

Suppose I earn 3 lakh from MFs my only liability is LTCG/STCG tax. Thereafter, while showing the gains in appropriate columns in annual ITR it will be tax free. Am I right, Sir?

Thanks for your comment.

Kaushal
 
#6
Thank you, again, Sir.

What I understood is:

There is no tax on the gains from MFs except LTCG/STCG.

Suppose I earn 3 lakh from MFs my only liability is LTCG/STCG tax. Thereafter, while showing the gains in appropriate columns in annual ITR it will be tax free. Am I right, Sir?

Thanks for your comment.

Kaushal
Hello
U r rite. As previously mentioned, LTCG Tax is nil at ur hands; STCG Tax is 15%+ cess.
mr india
 

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