I am investing in monthly SIPs of few diversified equity funds for the past three years. Two months ago, I stopped these SIPs. If I now redeem all units or switch to another fund, am I liable to taxes?
Depending on the type of fund that you have investments in, long-term or short-term capital gains tax will apply
I am investing in monthly SIPs of few diversified equity funds for the past three years. Two months ago, I stopped these SIPs. If I now redeem all units or switch to another fund, am I liable to taxes?
Diwakar Ojha, Patna
Investing through SIPs is a disciplined approach to regular investing. However, every SIP investment is treated as fresh investment. So, holding of each SIP unit will be treated differently and depending on the type of fund that you have investments in, long-term or short-term capital gains tax will apply. Long-term capital gains, holdings of over one year from sale of equity-oriented mutual funds are tax-free. If the SIP holdings are redeemed before completion of one year, then as these are equity funds, short-term capital gains will be applicable.