LTCG on switch in Mutual Funds IDCW option to Growth option in ELSS

Income Tax
1

I have an investment in ELSS fund with IDCW option and have been receiving annual payout. If I change the IDCE option to Growth option whether the same will be treated as " switch" and LTCG will be applied? Also post the switch whether a fresh 'lockin period" for the ELSS fund start?
Thanks and regards.
Hariharan V

2

Switch might be considered as redemption as both options have different NAVs.
New Lock in Period will start.
LTCG might be applicable as well.
Rest @Surbhi_Pal can throw more light on this.

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3

Hi @vasudevhari ,

So, switching your ELSS IDCW plan to a Growth plan will have the following implications:

  1. Capital Gains Tax – The switch is considered a redemption, so capital gains tax will apply based on your holding period.
  2. Fresh Lock-in Period – Since the growth plan is a new investment in ELSS fund therefore a fresh 3-year lock-in period will restart.
4

Thank you very much for the clarification.

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