Ch.8 · Capital Gains Tax on Mutual Funds · hard
What is the tax treatment of Fund of Funds (FoF) investing in domestic equity funds?
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EXPLANATION
Domestic Fund of Funds (FoF) investing in other mutual fund schemes are NOT treated as equity-oriented funds for tax purposes, even if all underlying schemes are equity funds. FoF gains are taxed at the investor's slab rate regardless of holding period (post April 2023 rules). This is a key tax disadvantage of FoF vs directly investing in the underlying schemes.
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