Sir, I have an equity MF whose SIP ran from 2012 to 2020 and redeemed The sale action incur LTCG with and without grandfathering. While NAV for each purchase is provided by the Fund House, wherefrom will I collect FMV of each purchase for the purpose of populating Sch112A?

Ans: Tax harvesting, especially in the context of mutual funds (MFs) and SIPs, involves strategically selling investments to realize capital losses or gains for tax purposes. Here's a simplified explanation:

Understanding LTCG and Tax Implications:
Long-Term Capital Gains (LTCG) tax is applicable on profits earned from selling MF units after holding them for more than one year.
As per current tax regulations, LTCG tax on equity MFs is applicable if gains exceed Rs. 1 lakh in a financial year, and the tax rate is 10% without indexation.
Tax Harvesting Procedure:
Suppose you invested Rs. 3,00,000 lump sum in a mutual fund scheme (A-MF) and earned a 12% return over one year, resulting in a total corpus of Rs. 3,36,000.
If you sell this corpus after holding it for more than 1 year (366th day or later), the LTCG would be tax-free up to Rs. 1 lakh.
Any LTCG exceeding Rs. 1 lakh would be subject to a 10% tax rate without indexation.
To minimize tax liability, you can strategically sell a portion of your investment before the end of the financial year to realize gains below the Rs. 1 lakh threshold.
By doing so, you can utilize the tax-free limit effectively and reduce the tax burden on your overall gains.
Example Illustration:
Let's say your total LTCG after holding the investment for more than a year amounts to Rs. 40,000.
If you sell a portion of your investment to realize gains of Rs. 60,000 before the end of the financial year, your total LTCG would still remain Rs. 40,000, within the tax-free limit of Rs. 1 lakh.
This strategy helps you optimize your tax liability by utilizing the tax-free threshold efficiently.
Consultation and Expert Advice:
Tax harvesting strategies can vary based on individual financial circumstances and tax regulations.
It's advisable to consult with a tax advisor or certified financial planner to assess your specific situation and implement tax-efficient investment strategies effectively.
They can provide personalized guidance tailored to your financial goals, risk tolerance, and tax-saving requirements.
In summary, tax harvesting in MFs and SIPs involves strategically realizing gains or losses to optimize tax liabilities. By leveraging the tax-free threshold and implementing effective strategies, you can minimize tax burdens and enhance overall returns on your investments.

Ans: It depends on type of scheme (equity or debt based scheme).

Short Term or Long Term depends on period of holding. Debt based scheme are always short term and taxable at slab rate. Equity based scheme are long term if it is sold after holding for 12 month or more. Long term capital gain on equity scheme is taxable at NIL rate upto 1 lacs of gain.

Ans: Yes, in my view there will not be any issue in claiming benefit of 112A for equity MF units acquired 1.2.2018