1. Like all mutual funds, a debt fund is taxed only on redemption (i.e. during STP too), but not during its investment or accumulation.
2. At the time of redemption (i.e. STP too), there is Capital Gains tax, if there are any gains, on difference between redemption value and initial investment, which is more relevant in Growth option as any value earned gets accumulated and added to the fund's NAV.
3. If difference between selling and purchasing date of a debt fund's unit is more than 36 months, the gain qualifies for Long-term capital gain (LTCG), otherwise it is Short-term capital gain (STCG).
4. If it is STCG, tax is calculated at income tax rate applicable to you, i.e., 0%, 5%, 20% or 30%, by adding it to your total income.
5. If it is LTCG, tax rate is 20%, after cost indexation which adjusts purchase cost for inflation, thereby making purchase cost higher.
6. This higher adjusted purchase cost is deducted from redemption value to arrive at LTCG, which is then taxed at 20%.
7. Both taxes are further subject to surcharge (if applicable) and cess.
2. At the time of redemption (i.e. STP too), there is Capital Gains tax, if there are any gains, on difference between redemption value and initial investment, which is more relevant in Growth option as any value earned gets accumulated and added to the fund's NAV.
3. If difference between selling and purchasing date of a debt fund's unit is more than 36 months, the gain qualifies for Long-term capital gain (LTCG), otherwise it is Short-term capital gain (STCG).
4. If it is STCG, tax is calculated at income tax rate applicable to you, i.e., 0%, 5%, 20% or 30%, by adding it to your total income.
5. If it is LTCG, tax rate is 20%, after cost indexation which adjusts purchase cost for inflation, thereby making purchase cost higher.
6. This higher adjusted purchase cost is deducted from redemption value to arrive at LTCG, which is then taxed at 20%.
7. Both taxes are further subject to surcharge (if applicable) and cess.