In this video in Hindi, we will discuss the taxation of hybrid mutual funds
One the reasons for the importance of the topic of taxation of hybrid mutual funds is that earlier this year there have been changes in long term capital gains tax for equity oriented funds
These are applicable for certain types of hybrid mutual funds
There have also been re-categorisation and rationalisation of mutual fund schemes which makes it important for you to know the tax implications of existing investments
This also becomes important as equity oriented hybrid funds popularly known as balanced funds were very popular in the recent past
Existing investors will like to know the tax implications of their existing investments
Of course, erstwhile balanced funds can only be sold as hybrid equity funds
The key determinant of taxation of hybrid funds is whether the schemes has invested 65% or more in equities
In case it is so, then it is taxed like an equity fund. If it is less than 65% in equities, it is taxed like a debt fund
If the hybrid fund has invested more than 65% in equities, it is an hybrid equity fund and is taxed like an equity fund
This means annual capital gains of more than Rs 1 lakh for investments in units more than one year old is taxed at 10% under long term capital gains tax
For capital gains on units less than one year old, short term capital gains tax of 15% needs to be paid
For hybrid funds that invest less than 65% in equities or hybrid debt funds, for units more than 3 years old, you get inflation indexation benefits and have to pay long term capital gains tax at 20%