Redeemed your MF investment? Here's what you pay to the taxman

Mutual fund investments consist of both debt and equity investments. A redemption of mutual fund investments gives rise to capital gain or loss, which are taxed as capital gains. A loss, however, can be set-off against other taxable gains from other asset classes. We discuss the tax treatment of the gains and losses below.

Debt funds

Debt mutual funds typically invest in government securities, corporate bonds, treasury bills, commercial paper, among others, which are usually deemed risk-free. Such funds provide you with returns in the form of dividend and capital gains. Debt mutual funds also bear market risks which may emerge from