What is the tax implication when Fund schemes merge?

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Your previous investment was in a passively managed equity fund, which merged into a similar passively managed scheme. Every time a scheme is merged, the fund house bears the Securities Transaction Tax (STT) because the merger is a redemption and then a purchase.

 

Your investments in the surviving fund will be considered a part of the scheme since the effective date of merger. So if you decide to redeem units, you will have to pay the STT on redemption from current scheme.

 

Long term capital gains tax will be nil on investments older than 12-months but you have to pay Short term capital gains tax on investments that less than 12-months old.

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