need to pay capital gain tax on mutual fund switch?

#1
Hi
I am holding some mutual fund since 2015 now market is down I am planning to switch some equity fund who not performing well in some other equity fund from same house SBI mutual fund. My question is should i need to pay capital gain tax on switch?
 
#2
Hi
I am holding some mutual fund since 2015 now market is down I am planning to switch some equity fund who not performing well in some other equity fund from same house SBI mutual fund. My question is should i need to pay capital gain tax on switch?
Mutual funds gains are grandfathered upto 31 Jan 2018.This means that for equity mutual funds bought before 31 Jan 2018, the capital gains will be computed over and above NAV on 31 Jan 2018.The current NAV will most likely be below the NAV as on 31 Jan 2018 and if you redeem these units,there will be no capital gains tax payable.

Smart_trade
 

TracerBullet

Well-Known Member
#3
But also note that you will not be able to book the difference as a loss. I am not 100% sure but i think going forward you will have to pay tax from purchase price. So if poor performing scheme is say in 1L loss from grandfathered price and you sell now then that loss is permanent and will not be adjusted against new scheme.

Also, since you are switching within fund house, its possible that you are trying to move to best performing schemes in recent years. That may or may not work, as market cycles keep changing. Value funds are beaten down with only some stocks and some sectors making money. That wont last forever. ( As long as the old fund is decent and not say a sector specific fund or you have some other valid reason)
 
#4
Thanks, after your suggestion i am not switching but just now i am aware that i have invested in regular funds means commission i am paying every quater.

Can i just switch same fund from regular to growth? or it will also consider as investing on new fund and i have to pay capital gain tax.
 
#5
Thanks, after your suggestion i am not switching but just now i am aware that i have invested in regular funds means commission i am paying every quater.

Can i just switch same fund from regular to growth? or it will also consider as investing on new fund and i have to pay capital gain tax.
Any switch is considered as a redumption and a new investment...so even in switch you have to pay applicable capital gains.

Smart_trade
 
#6
ok so in same fund if i switch to dividend or growth or direct is considered as new investment?

Also can you tell, is capital gain tax auto deducted when i redeem fund or i need to show in my tax return and pay manually?
 
#7
ok so in same fund if i switch to dividend or growth or direct is considered as new investment?

Also can you tell, is capital gain tax auto deducted when i redeem fund or i need to show in my tax return and pay manually?
Capital gains tax is not deducted at source when you redeem funds.....you have to show capital gains in your IT return and pay CG Tax on it..
 

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