Sir i am housewife. I have no earning. Got 4 lakh long term capital gain from mutual fund. Shall i pay tax and file incometax

Ans: As a housewife with no other income, your tax liability on long-term capital gains (LTCG) from mutual funds needs to be considered.

Long-Term Capital Gain Tax on Mutual Funds:
Long-term capital gains from equity mutual funds are taxable at 10% if the LTCG exceeds Rs. 1 lakh in a financial year, without the benefit of indexation.

Do you need to pay tax?

LTCG Calculation: If your LTCG from mutual funds is more than Rs. 1 lakh in the financial year, you will need to pay tax on the amount exceeding Rs. 1 lakh at 10%.
Exemption Limit: If your total income, including LTCG, is below the taxable limit (basic exemption limit), you may not be required to pay tax.
Tax Filing: Even if you're not liable to pay tax due to income being below the exemption limit, you should still consider filing an income tax return to report the LTCG. Filing an income tax return will also serve as proof of your income source.
Steps to Follow:

Calculate LTCG: Calculate your LTCG from mutual fund repurchase.
Check Exemption Limit: Determine if your total income, including LTCG, is below the taxable limit for the financial year.
Tax Payment: If your LTCG exceeds Rs. 1 lakh and you have a tax liability, pay the tax before filing the income tax return.
File Income Tax Return: Even if not liable to pay tax, file an income tax return to report LTCG and claim exemption, if applicable.
Keep Records: Maintain records of mutual fund statements and LTCG calculations for future reference.
Conclusion:
Given the above, it's advisable to calculate your LTCG, assess tax liability, and file an income tax return accordingly. If unsure about the calculations or tax implications, consider consulting a tax advisor or chartered accountant for guidance.

Ans: Mutual fund investments are subject to taxation. Long-term capital gains (LTCG) on equity mutual funds above Rs. 1.25 lakh are taxed at 12.5%.

You invested Rs. 1 lakh. After 20 years, the value became Rs. 10 lakh. Your profit is Rs. 9 lakh.

The exemption limit is Rs. 1.25 lakh. You need to pay LTCG tax on Rs. 7.75 lakh.

Ways to Reduce LTCG Tax on Mutual Funds
1. Use Tax-Free Withdrawal Every Year
LTCG tax applies only if gains cross Rs. 1.25 lakh in a financial year.

You can withdraw gains up to Rs. 1.25 lakh tax-free every year.

If planned well, you can avoid LTCG tax completely.

Start partial withdrawals after a few years instead of waiting for 20 years.

2. Use Systematic Withdrawal Plan (SWP)
SWP allows you to withdraw a fixed amount regularly.

This spreads LTCG across multiple years.

You can keep withdrawals under Rs. 1.25 lakh per year.

This helps avoid or reduce LTCG tax.

3. Redeem in Family Members' Names
If your spouse or family members are in a lower tax bracket, use their accounts.

Gift them mutual fund units and redeem in their name.

Ensure that each family member stays within the Rs. 1.25 lakh exemption limit.

This can help divide and reduce tax liability.

4. Plan Redemptions in Phases
Selling everything at once leads to higher tax.

Instead, sell in small parts over multiple financial years.

This ensures that you stay within the exemption limit each year.

Strategic planning can significantly reduce your tax burden.

5. Use Capital Gains Against Exempt Income
If you have losses from stocks or mutual funds, use them to offset LTCG.

Short-term capital losses can be adjusted against LTCG.

This will reduce taxable capital gains and lower tax.

Finally
You cannot avoid LTCG tax completely. But proper planning helps reduce the tax burden.

Spreading withdrawals, using family member accounts, and optimising fund selection can help.

A Certified Financial Planner can guide you in structuring withdrawals for tax efficiency.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment