How to calculate tax on STP from liquid to equity funds

Had you given us the fund names, amount, STP frequency and the date of investment we would have given you the exact calculations using our STP return calculator tool https://www.advisorkhoj.com/mutual-funds-research/mutual-fund-stp-investment-calculator However, you can do it yourself using the above tool by inputting your investment details.

The profits you are making on each STP transfer, will be treated as short term capital gains (if all the transfers are within 3 years from the date of investment) and will be taxed according to your income tax slab. For example – you have invested Rs 1 Lakh in a liquid fund @ Rs 10 NAV and got 10,000 units. After a fortnight you transferred Rs 1,000 to an equity fund when the NAV was Rs 10.20. Therefore, the fund redeemed 98.0392 units from the liquid fund to transfer Rs 1,000 to the equity fund. In this case the profit will be calculated as – NAV on the day of sale i.e. @ 10.20 minus NAV on the day of purchase i.e. @ Rs 10.00 x number of units i.e. 98.0392 units. So the total profit is Rs 19.61 (98.0392 units x 0.20). Assuming, you are in 30% tax bracket, you will have to pay short term capital gains tax @30% on Rs 19.61.

Hope the above is clear to you.

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