Profit On Sale Of Mutual Fund

Lets look at an example to understand what mutual funds capital gains mean.

Profit on sale of mutual fund. Lets assume you purchased a few units of a mutual fund for Rs. For Equity Mutual Funds. When this fund is sold at profit means at a value higher than at the time of purchase then the gain is called capital gain.

No change has been proposed to STT tax rate structure. Using the average cost method of accounting the tax-free portion of a sale mirrors the proportion of the basis to the total value. A fund manager predicts that opportune moment when selling a fund would reap the most profits or gains.

The Budget 2018-19 has proposed to introduce tax on Long Term Capital Gains on sale of stocks and equity mutual fund units from FY 2018-19 or AY 2019-20 onwards. Many mutual fund investors would be wondering whether GST will have any adverse impact on their investments. Since the dividend is coming directly from the NAV the NAV will fall by Rs 2 to Rs 18.

Suppose you hold 1000 mutual fund units with an NAV of Rs 20 and the fund house declares a dividend of Rs 2 per share. DDT on Debt Mutual Funds is 2884 Once the dividend is paid by the fund house the NAV of that scheme falls to that extent. For the following examples I will assume a mutual fund holding worth 20000 with a cost basis of 10000.

Incomes from these funds are steady as issuer companies are bound to disburse dividend periodically and entail a lower risk factor. You bought these units at 100 and sold at 150 netting a profit of 3000 50 60. Indias biggest tax reform Goods and Services Tax or GST is about to be a reality from July 1.

So if the entire fund is worth 100000 and your basis is. You have to pay 15 per cent of your profits short term capital gains towards tax if your holding period is less than a year. Profit of Sale of Mutual Fund is Capital Gain not Business Income.