Can we sell and buy the same mutual fund on the same day for the same amount?
Basically, I want to take the advantage of the capital gain loss so wanted to sell and again buy the same fund before the cut-off time.
Yes.
If you have the cash to buy the units, yes this will work. If you want to use the money from the sale to buy the units, you will have to wait a few working days for that amount to hit your bank account.
Thanks. Yes, I wonât be using the same money to reinvest.
Months back I had read about some 30 days rule that u need 30 days gap to get the tax benefit.
Are you sure this is legal and I will get a tax benefit by doing this? I am doing this only for the fund that has given me negative returns.
@Quicko Can you also please let me know your opinion
I have heard of some such rule meant to prohibit dividend stripping, but none related to capital gains harvesting.
@Quicko will be able to make this clear.
Yes @Jack_R , you can buy and sell mutual fund units on the same day, but then it would be considered intraday trading instead of capital gains.
Really? This is entirely news to me!
Could you please point out the section of the ITR (or other circulars/regulations) which say that buying and selling mutual fund units is considered as intra-day trading?
Edited to add: Did you mean to say that this applies to exchange-traded funds? If so, then that is something I can go along with. Does the same apply to âusualâ mutual funds, where the buying and selling happens between us and the fund house?
I think you are confusing stocks with mutual funds. How can Mutual funds transactions be considered intraday??
@ZeroIndian @Jack_R, If you buy a mutual fund, you get the delivery after mutual fund transactions are executed. If you get the delivery of mutual funds and then you sell it, the gain would be considered as capital gain. The transaction would be considered as intraday if you sell any security without delivery.
But there is no concept of intraday in mutual funds right? How can it be treated as an intraday profit/loss?
I dont see any intraday section in kuvera for mutual funds
Basically, I want to understand if this will benefit me in saving some tax as I am selling when I am in a loss and buying it again.
You canât.
Didnât get you?
To the best of my knowledge, there is no notion of intraday trading in mutual fund units.
This is about the âusualâ mutual funds. Since ETFs are traded on exchanges, it may be possible to do intraday stuff with them. I have neither knowledge nor experience with regard to ETFs.
If you are talking about non-ETF mutual funds (which are what we usually mean when we say âmutual fundsâ), then there is no risk of transactions becoming intraday if you buy and sell on the same day.
I have no idea why @Quicko said that intraday trading is possible in mutual fund units. However, I am not the expert here, they are; so they are probably right, and I am wrong.
Ya, what you are saying makes sense.
@Quicko Are you talking abt EFT mutual funds? I am referring to normal mutual fund buy and sell (not ETF)
Hi @Jack_R, since you want to claim benefit of Tax-Loss Harvesting, which is booking loss by selling securities and buying the same again. You will have to wait for the sell order to get executed before you can again buy it. However, with mutual funds, if you execute a buy order before the previous sell order being executed, the order will get cancelled.
This is getting more and more curious ⌠. Are we all talking about the same thing, when we say âmutual fundsâ?
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For Tax Loss Harvesting which is booking losses and buying the securities again to have a tax benefit.
If we talk about Mutual Funds, which are not traded on exchanges but allotted by Mutual Fund Companies:
When you choose to sell any number of Mutual Fund Units, the âsell transactionâ is executed generally at the end of the day. Thereafter, you would not be able to purchase the units on the same day which you means, there can not be any consequent âbuy transactionâ that can be executed on the same day. However you will be able to place an order on the same day, which is not equivalent to buying/ having units. Therefore for the purpose of Tax Loss Harvesting the objective of buying and selling on the same price on the same day was not executed (and for all practical purposes not possible).
If we talk about ETFs (Exchange Traded Funds), the scenario is different. You will be able to buy and sell them on the same day (just like stocks). However, for the purpose of Tax Loss Harvesting, you will have to ensure that you buy the ETFs again the next trading day/ or after the day you have the sold the ETFs.