Income Tax Return: Income Tax Department has complete information about your transactions in Mutual Funds.
ITR Filing For AY24: The last date for filing income tax return for FY 2022-24 and Assessment Year 2023-24 is 31 July 2023. And during the financial year 2022-24, if you have earned capital gain by investing in mutual funds, do not forget to report it in your ITR. Because it is very important in ITR to disclose income from investment in mutual funds in a financial year.
Check Equity or Debt Fund
The tax applicable on profits from mutual funds depends on many factors. In which it is important that for how long you have held mutual funds. Let us tell you that both equity mutual funds and debt mutual funds have to pay tax. Any mutual fund that invests 65% in equity is called an equity mutual fund.
Tax based on holding period
If the investor has sold the mutual fund units after making a profit in less than a year, then short-term capital gain tax at the rate of 15 per cent has to be paid. And if the holding period is more than one year, then long-term capital gain (LTCG) is made on the profit from selling the units, which is taxed at 10%. However, there is no tax on long term capital gain up to Rs 1 lakh per annum. 10% tax has to be paid on profit of more than one lakh without any indexation benefit.
Keep capital gains statement close by
If you have made profit on selling equity mutual funds, then you have to take care of many things. While filing ITR, you need to keep Form 26AS, Annual Information Statement (AIS), Tax Information Statement (TIS), Capital Gain Statement along with Form 16. AIS and TIS will have complete information about the value of mutual fund units bought and sold in a year. By going to the capital gain statement, you can see how much is short term capital gain and long term capital gain. Both the amounts will be written in the capital gain statement. You have to report capital gains from equity mutual funds in Schedule 112A and short term capital gains in Schedule CG. And if you have also received dividend on investment in the fund, then this income has to be shown in Schedule of Other Sources.
Income tax department knows everything
It is very important to keep these things in mind while filling ITR. Reporting of capital gains is necessary as the tax department has complete details of transactions of mutual fund units by you which are provided by mutual funds to them.
