Positive impactCorporate Action
Mutual fund switching may become tax-free: Experts explain SEBI proposal and what could change in capital gains tax rule
Mint 1 hr ago·3 Nov 2026, 9:12 am
The Securities and Exchange Board of India (SEBI) has floated a draft amendment that would treat a switch from one mutual‑fund scheme to another as a tax‑free event, provided the investor has held the original units for at least one year. Under the current law, such a switch is treated as a sale, triggering short‑term or long‑term capital‑gain tax.
If adopted, the change could lower the cost of rebalancing portfolios, especially for investors who move money between equity and debt schemes or between actively managed and index funds. It would also simplify tax filing, as the transaction would no longer need to be reported as a taxable sale.
Investors should watch for SEBI’s final order and the timeline for implementation, as well as any guidance from the Income Tax department on the exact conditions that will qualify for exemption.
Excerpt from Mint
SEBI has recommended exempting mutual fund switches from capital gains tax if units are held for more than a year. Experts explain what switching means, how it is taxed under current rules, which transactions could qualify and how the proposal may benefit investors. The Securities and Exchange Board of India ( SEBI )…Read the original at Mint
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