Ch.8 · Capital Gains Tax on Mutual Funds · hard
What is 'tax harvesting' in the context of equity mutual fund LTCG?
0% of students got this wrong
EXPLANATION
Tax harvesting involves redeeming equity fund units each year when LTCG is within the ₹1.25 lakh exemption limit (effectively tax-free) and immediately reinvesting at the prevailing NAV. This resets the cost of acquisition to the current NAV, reducing future taxable gains. For example, redeeming ₹1.25 lakh of LTCG annually and reinvesting saves 12.5% tax on those gains.
Practising Chapter 8 one question at a time?
Try the full chapter — 80 questions, tracked score, weak area breakdown.