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How are the earnings on funds in ‘Wealth Edge’ taxed?

For earnings on US-equity funds, your earnings will be taxed similar to non equity funds as explained below:

You have to pay taxes on your capital gains to the income tax department. The difference between purchase price and the sale price is defined as capital gain. If you buy and sell within 3 years, then short-term capital gains are taxed as per your income tax slab rate. If you sell after 3 years, then long-term capital gains tax rate is 20% with indexation benefit. 

E.g.: Let's say you bought a US equity fund for Rs. 10,000 in 2011-12 and you are selling it in 2012-13 for Rs. 11,000. This means, your short-term capital gain is Rs. 1,000. On this, you would have to pay a tax of Rs. 300 if you're at the highest income level with 30% taxable income.

If you sell your funds after 3 years in 2014-15 for Rs. 13,300, when you adjust for indexation the cost of purchase is considered as 10,000 x 1024/785= 13,044.

This means your indexed long-term capital gain is Rs. 266 and your tax amount will be only Rs. 53.20.

For earnings in Large Cap, Diversified and Mid cap, your earnings will be taxed similar to equity funds explained below:

You have to pay taxes on your capital gains to the income tax department. The difference between purchase price and the sale price is defined as capital gain. If you buy and sell within 1 years, then short-term capital gains are taxed at 15%. If you sell after 1 years, then long-term capital gains tax rate is 10% on gains more than Rs. 1 lakh.


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