Mutual fund unit is treated as stock in trade or investment if invested through borrowed money

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  1. Ibrahim Bhabhu

    Ibrahim Bhabhu New Member

    I had taken a personal loan from bank for 5 lakhs and invested in equity mutual fund and plan it to keep it for long term 5 yrs. and more would this gain would be treated as capital gain or business income since investment is made out of borrowed money do i need to show this as a stock in trade or investments if stock in trade then whether all my investment in mutual funds other than this loan amount would need to be shown as stock in trade because I m investing since 2010 in mf from my savings and gifts and during previous year before taking loan had sold some units which were filed as ltcg do i need worry about my previous gain as well.
     
  2. Karan Batra

    Karan Batra Well-Known Member

    1. The facts mentioned above indicate that you have made this investment not for the purpose of trading but for holding it for long term and therefore these would be classified as Long Term
    2. Long Term Capital Gains on sale of shares and mutual funds which are held for more than 1 year are exempted from the levy of any income tax
     
  3. sai tejesh(ca.final)

    sai tejesh(ca.final) Active Member

    Subject to the condition that transfer of such equity oriented units is subjected to the levy of securities transaction tax(STT).
    If not,then entire long term capital gains shall be chargeable to tax @ 20% u/s 112(1)(d).
     
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