What are the tax implications of investing in a mutual fund?
Finance Act, 2010 introduced section 37(A), regarding the applicability of capital gain tax on securities including units of open ended mutual funds, in the Income Tax Ordinance, 2001 with effect from July 01, 2010 which states that; “The capital gain arising on or after the first day of July 2010, from disposal of securities held for a period of less than a year, shall be chargeable to tax at the rates specified in Division VII of Part I of the First Schedule; Provided that this section shall not apply if the securities are held for a period of more than a year; Provided further that this section shall not apply to a banking company and an insurance company.(For insurance companies please refer clause 6B of fourth schedule of Income Tax ordinance, 2001) Where a person sustains a loss on disposal of securities in a tax year, the loss shall be set off only against the gain of the person from any other securities chargeable to tax under this section and no loss shall be carried forward t
