Tax treatment on debt funds

POSTED BY rajat ON March 21, 2011 10:00 pm COMMENTS (3)

I want to know when does one become liable for paying tax in a debt mutual fund. In equity funds, we don’t have to pay anything as tax after 1 year? Does the same applies to debt funds too?

3 replies on this article “Tax treatment on debt funds”

  1. ashal jauhari says:

    Dear Ajkashyap, yes STCG & LTCG from NCDs are taxed similar to Debt MFs.



  2. ashal jauhari says:

    Dear Rajat, For debt funds, here are the tax rules.

    1. If holding period is less than 1Y – The gains if any ‘ll be called STCG (Short Term Capital Gains) & ‘ll be added to your income from all other sources & taxed at your marginal Tax slab.

    2. If holding period is more than 1Y, the gains if any ‘ll be called LTCG (Long Term Capital Gains) & ‘ll be taxed @ flat rate of 10.3% without indexation or 20.6% with indexation of purchase price, which ever is favorable to you.



    1. ajkashyap says:

      Hi, What about tax treatment of NCDs listed on Exchange.( like L&T fin, tata cap. etc)

      Is it same as Debt Mutual Fund?

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