Ch.8 · Dividend and STT Taxation · medium
What are the tax implications of switching between mutual fund schemes?
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EXPLANATION
For tax purposes, a switch is treated as two separate transactions: (1) redemption from the source scheme — capital gains (STCG or LTCG depending on holding period) may be taxable; (2) fresh purchase in the target scheme at the current NAV — a new holding period starts. There is no tax-exempt switching even within the same AMC. Investors must account for the tax impact before switching.
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