Indians seem to be getting comfortable with mutual funds as an investment instrument. The mutual fund industry has grown nearly 7 times in the past decade. Moreover, its diversification feature seems to attract investors the most. Mutual fund scheme categories, such as equity, debt, hybrid, solution-oriented and others, help investors diversify their portfolios. However, like almost all other investments, mutual funds also generate capital gains/losses.
The capital gains tax can constitute a significant part of overall tax liability for an individual. These tax rates change based on the concerned instrument and its type. Therefore, calculating the capital gain tax is crucial.
A capital gain statement for mutual funds can simplify this task to an extent. However, investors can be less aware of this statement and its use. Let’s learn how to get the capital gain statement for mutual funds.
Capital gain taxation of mutual fund investment
Capital gains arise when the invested capital appreciates over a period in a market investment. Mutual funds have exposure to equity, bond, government security, etc., markets in different ways. Therefore, the gain arising out of mutual fund investment is categorised as capital gain.
In India, its taxation norms have evolved over the years. Recently, in Budget 2024, these taxation rates and holding periods of mutual funds were changed. Based on it, the capital gain tax for mutual fund investments is as follows:
| Particulars | Short-term capital gain tax | Long-term capital gain tax |
| Equity-oriented mutual fundsHolding period = 12 months | 20% | 12.5%(tax is not applicable up to ₹1.25 lakhs capital gain) |
| Debt-oriented mutual funds(65% or more investment in debt )Holding period = 24 months | Investor’s tax slab rate | Investor’s tax slab rate |
| Other mutual fundsHolding period = 24 months | Investor’s tax slab rate | 12.5% |
Source: Association of Mutual Funds in India (AMFI)
For example, Mr ABC invests in Mid-cap equity funds in the following way:
- Purchased 200 units of NAV ₹1000 in March 2023. Total investment = ₹2 lakhs.
- Sold this full investment in August 2024 at ₹3.15 lakhs.
- Therefore, his long-term (more than 12 months) capital gain would be ₹1.15 lakhs (3.15 lakhs-2 lakhs).
- This amount is less than the limit of ₹1.25 lakhs. Therefore, his gains are tax-free.
However, if had invested the same amount, for a similar period, in Gold ETF funds (other funds), he would have to pay short-term (less than 24 months) capital gain tax of ₹ 14,375 (1.15 lakhs* 12.5%) as capital gain tax.
Check this out! The Benefits of Capital Appreciation and Its Impact on Investments
However, to calculate tax with these rates, accurate calculation of capital gain is crucial. It is facilitated by the capital gain statement.
What is a capital gain statement?
It is the detailed document of an investor’s gain or loss from the sale of mutual fund units. It includes details such as dates of purchase or sale, no. of units, applicable Net Asset Value (NAV) at the time of transaction, tax implications, withdrawals, etc.
Significance
This statement can be used for multiple purposes as follows:
- Performance review: Investors can check the performance of schemes and analyse them based on their type, instruments, strategies, Asset Management Companies (AMCs), and other suitable factors.
- Tax liability calculation: Calculating accurate capital gain is the base for tax calculations, which can be facilitated by the capital gain statement for mutual funds. Moreover, investors can strategise other investments based on potential tax liability.
- Audit facility: Investors can use this statement to audit their investments and also provide for tax audits.
How to get capital gain statements for mutual funds?
The authenticity of a capital gain statement and its sources is crucial. Therefore, investors can access it online in the following ways:
Registrar and transfer agents (RTAs)
These are intermediaries concerned with the custody of the unitholder’s information, account, and transaction details and facilitate the transfer of units for the investors. Entities like Karvy, CAMS, Fintech, etc., are some of the popular RTAs. Follow these steps to download the capital gain statement:
- Step 1: Investors can visit the main website and select the ‘Capital gain/loss statement’ option from the statements tab.
- Step 2: Further, one needs to create an account or log in with an email ID. It may differ based on the RTAs.
- Step 3: Select the required financial year and the all funds option to get overall details of capital gain/loss.
- Step 4: Investors may get an option for ‘Email and encrypted attachment’ or enter your email address.
- Step 5: One can access the document in their email id.
Apart from the online process, investors can also visit the service centres to facilitate any mutual fund transaction or get documents like a capital gain statement. They provide application forms and instruct for the process ahead.
AMC
Asset Management Companies (AMCs) (also known as fund houses) are the key stakeholders of mutual funds. Their mutual fund schemes collect money from investors and invest in different securities. They have all the data of investors. Therefore, investors can access the statement online as follows:
- Step 1: Log in to the AMCs website of application.
- Step 2: One can get the capital gain statement from the documents section.
- Step 3: It may be directly sent to the registered email address, or investors need to enter the required details.
In the offline process, investors can visit the nearest AMC office with the required documents and apply for the capital gain statement.
Broker’s application and website
The broker is in direct contact with the investor. Brokers have their website or applications that have almost all the details of an investor’s account, transaction, etc. Therefore, they can provide the required documents to them. Follow these steps to download the capital gain statement:
- Step 1: Visit the application or website of the broker.
- Step 2: Enter the credentials like mobile number, email or folio numbers.
- Step 3: Details of all the investments will be displayed. Investors can check the documents or account section.
- Step 4: Here, one may be able to directly download the statement.
- Step 5: Usually, the file is encrypted, and directions for its password are given on the application or website.
One may also write an email or postal letter to the concerned broker with the request.
Other investment platforms
Several other platforms provide the service of downloading a capital gain statement by entering the credentials like folio number or Permanent Account Number (PAN). However, these are third-party platforms, and investors should first check their authenticity before providing details.
Must read: Section 194K: TDS on dividend income from mutual funds
Summary
The mutual fund investments are gaining popularity among the investors. However, only investing may not be enough, and one should make proper provisions for various functions related to it, such as taxation. The capital gain or loss arising from the mutual funds is taxed at the prescribed rates.
Investors can use facilities such as the capital gain statement for calculating the accurate capital gains. It is a document that accounts for all the concerned transactions. Getting a capital gain statement for mutual funds can be facilitated by RTAs, fund houses, brokers and other online websites.
Also, read about Tax Implications in Share Trading and F&O
FAQs
- What is a capital gain statement?
This document is crucial to ascertain the capital gain tax liability. Investors can get details such as mutual fund investment purchase and sell dates, applicable NAVs, capital gain or loss incurred from the sale of investments, etc. It is crucial to track the investment performance, facilitate the audit process, provide accurate capital gain/loss amounts and can be used as a valid document.
- What are the different ways to download capital gain statements online?
Investors can download the capital gain statement from different sources, such as from the website or application of RTAs, brokers, AMCs, and other authentic investment platforms. Apart from this, investors can visit the offline service centre or write postal letters to AMCs or brokers to facilitate the required service.
- What is a capital gain tax on debt funds?
The debt-oriented funds that invest more than 65% in the debt instruments are categorised separately. They are taxed at the investor’s income tax slab rate irrespective of the holding period of such funds. Moreover, the debt funds which invest less than 65% in debt instruments will be categorised as other funds. These are charged at slab rate if held for less than 24 months and otherwise at 12.5%.
- How much long-term capital gain is tax-free?
If an investor earns a capital gain of less than or equal to ₹1.25 lakhs through equity-oriented funds, they can get the tax benefits. The capital gain tax liability becomes nil in such a scenario. However, such a facility is not available for any other category of mutual funds.
- How does a capital gain statement help in financial analysis?
Capital gains are a crucial component of overall tax liability calculation for an individual. They are applicable for market investments. Therefore, a capital gain statement can provide investors with accurate gain/ loss details. It can be further used to track the financial performance of an investment, instrument, AMC, etc., which can help in future decisions.
