GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Entry load is allowed
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Exit load is not allowed
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Entry load is not allowed
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Exit load allowed is some cases
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Detailed explanation-1: -Answer: Yes, capital gains are net of exit loads. You do not have to pay short term capital gains tax on the exit load deducted by the AMC for early redemptions.
Detailed explanation-2: -Exit Loads on Various Types of Mutual Funds Debt funds may or may not have an exit load. However, one can ignore the expense by adjusting the investment tenure with the time period for which the fund charges an exit load. Same with equity funds. It varies but is usually around 1% if redeemed within the first 12 months.
Detailed explanation-3: -Mutual funds that require you to pay a load on purchase are referred to as entry load, while funds that require you to pay a load upon sale are referred to as exit load. Sometimes, an investor can lower the cost by negotiating with the broker to waive off the load.
Detailed explanation-4: -As per SEBI guidelines, a fund house is allowed to charge a maximum exit load of 7% of the redemption amount. However, fund houses generally charge an exit load of 1% on redemption value to keep the schemes attractive.