about switching in mutual funds

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Benevolent
kukdookoo
Suppose one is investing in abcd fund in amc 1. now if one switches to some other fund after say 10 months or after 2 years within the same amc, then there is no tax?
Is full amount needed for switch or is partial amount switching allowed too?
Can switch happen from equity to debt fund and vice versa?
The profit or loss, short term or long term, will not be shown in case of switching in ITR?
Is there any possibility to switch from amc 1 to amc 2 to avoid tax?

@legend101 @Watcher @Rajkotian @Jarvis.-.
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Commentator Commentator
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Any switching is equal to redemption so it is subject to Short or long term capital gain tax depending on the holding period. Partial amount can also be switched. Any category to any category of fund type is allowed, as long as company is allowing. Switching is between same company not different companies. You can generate CAMS statement for details on taxation.

-- NISM certified mutual fund distributor cum insurance advisor.

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Benevolent Benevolent
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Suppose one is investing in abcd fund in amc 1. now if one switches to some other fund after say 10 months or after 2 years within the same amc, then there is no tax? - there is tax as switching is considered as sale 
Is full amount needed for switch or is partial amount switching allowed too? - partial allowed
Can switch happen from equity to debt fund and vice versa? - yes 
The profit or loss, short term or long term, will not be shown in case of switching in ITR? - no it'll not shown correctly in AIS/ITR u have to get capital gain statement to know actual STCG/LTCG
Is there any possibility to switch from amc 1 to amc 2 to avoid tax? -  no bypassing tax is not possible, only way to avoid tax is stop switching unnecessary - harvest upto 1lac each year - stay invested for long long time

Benevolent Benevolent
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thanks. as switching is considered as sales so why do platforms highlight switching as an efficient tax reducing method? wrong info?
what exactly is the benefit of switching?
about harvesting of tax, if one is investing for a long period then does harvesting upto 1 lac if profit is there makes sense?
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Entertainer Entertainer
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Switching shayad mf mai nhi hota, pehle sab sale hota hai phir purchase.

Commentator Commentator
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Any switching is equal to redemption so it is subject to Short or long term capital gain tax depending on the holding period. Partial amount can also be switched. Any category to any category of fund type is allowed, as long as company is allowing. Switching is between same company not different companies. You can generate CAMS statement for details on taxation.

-- NISM certified mutual fund distributor cum insurance advisor.

Benevolent Benevolent
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thanks. as switching is considered as sales so why do platforms highlight switching as an efficient tax reducing method? wrong info?
what exactly is the benefit of switching?

please share ur views on this thread alsohttps://www.desidime.com/discussions/sector...ds
Helpful Helpful
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Switch = sell and then buy. Whichever scenario.

Deal Subedar Deal Subedar
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I am not an expert at tax harvesting but As far as I understand, it is done the same day. You are supposed to make a redemption request first and the place a new order the same day. (To mitigate the effects of Nav price movements).

This raises the two questions in mind. 1. Does this mean one has to have funds extra as much as the redemption request to place the order?

I think so.

2. Even if you do, will that cancel out each other like an intraday trade in stocks?

This is the tricky part. As I've noticed lately, even when you place an order using upi(instant payment should be allotted units per the nav of the payment date) the fund house usually allots units per the nav of next day or the day after that. So, your trade will not be considered an intraday trade and you will lose out on the nav a day or two. But that shouldn't be a problem in the long run if nav doesn't oscillate much.

If anyone has any ideas or clarification on this, most welcome to correct my assumptions.

Deal Cadet Deal Cadet
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I have been investing in mutual funds for a long time now. Every year I redeem partial amount in some fund to release profit of 1 lac and put in the released amount again in same mutual fund in couple of days. Yes, it does make average NAV to move up but in absolute terms it does not make any difference and you just saved tax of 10k.

Benevolent Benevolent
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but in absolute terms it does not make any difference

paji what does this mean?
Critic Critic
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What do you expect should increase after switching if not NAV (assuming profit)?
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Commentator Commentator
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Delete

Community Angel Community Angel
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I have never heard of switching before. Can you elaborate how you do it? All i have done is to sell and buy another one. 

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