Ch.8 · Capital Gains Tax on Mutual Funds · medium
What is the tax on STCG from a hybrid fund with 40% equity allocation?
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EXPLANATION
Tax treatment is binary — not proportional. If a hybrid fund has less than 65% equity allocation, ALL gains (both STCG and LTCG) are taxed at the investor's slab rate, regardless of the actual equity percentage. A fund with 40% equity and 60% debt is treated entirely as a debt fund for tax purposes. The 65% threshold is the only dividing line.
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