Can you suggest if one can get tax free return after 3 years from mutual funds

At the outset, please note that debt funds are mutual funds only.

In India, investors relate investment in equity funds only to mutual funds. But that is not correct as mutual funds offer not only various kind of equity funds, it also offers debt funds, balanced funds, fund of funds, Index Funds and Gold funds and so on. There are wide choices suiting all your investment needs when you consider investing in mutual funds.

Only the equity funds or equity oriented funds like, balanced funds offer tax free returns under long term capital gain taxation, if the investment horizon is more than one year. Unfortunately, for debt funds the classification of long term is more than 3 years, that too with indexation benefit. That means, if you redeem your debt fund after 3 years, you will have to pay tax @20% rate after indexation.

Please read this blog - https://www.advisorkhoj.com/company/Peerless-Mutual-Fund...

Since your investment horizon is 3 years only, there is no way you can get tax free returns. Even though equity funds, as mentioned above, offer tax free returns after one year, the same cannot be suggested to you as your investment horizon is 3 years only. Equities are best suggested for investment horizon of 5 years or more.

Hope the above helps! Thanks for writing to Advisorkhoj : )