Mutual Fund Mastery interview preparation

Questions

100

Traced to a firm

32

Firms

19

Updated

September 2026

Asked at

All firmsVanguard5BLBlackRock3FTFranklin Templeton3Invesco3PIMCO3Fidelity Investments2J.P. Morgan2Morningstar2Neuberger Berman2SCSchroders2T. Rowe Price2Amundi1BMBNY Mellon1Goldman Sachs1Man Group1Northern Trust1SSState Street1Sycamore Partners1WMWellington Management1

Topic

All topicsFund structure and regulation7NAV and operations6Scheme categorisation4Equity schemes5Debt schemes7Risk, liquidity and disclosure7Index funds and ETFs6Hybrid and solution schemes3Costs, plans and commissions6SIP and investor mechanics5Performance measurement6Taxation5Distribution, compliance and NISM5Portfolio construction and advice5Estimation and numeracy5Markets and industry6Career and fit12

Level

AnyCoreIntermediateHard

Type

AnyTechnicalCaseFitBrainteaserMarket view

1. 063Walk me through the taxation of equity mutual funds in India.TaxationCoretechnicalIndian AMCsDistribution and sales

   Say this

   For an equity-oriented scheme, held over twelve months the gain is long-term and taxed at 12.5 percent above an annual exemption of 1.25 lakh. Held twelve months or less it is short-term and taxed at 20 percent. Both rates were changed in July 2024, from 10 and 15 percent respectively.

   Then walk it

   1. The definition matters first: equity-oriented means at least 65 percent of the portfolio in equity of domestic companies. That is what brings arbitrage funds, aggressive hybrids and equity savings funds into this treatment.
   2. Long-term: holding over twelve months, 12.5 percent without indexation, and the first 1.25 lakh of aggregate long-term equity gains in the financial year is exempt. The exemption is per person per year across all equity assets, not per scheme.
   3. Short-term: twelve months or less, 20 percent flat regardless of the investor's slab. A high earner pays 20 and so does someone in the 5 percent bracket, which occasionally makes short-term redemption worse than slab treatment for a low earner.
   4. Securities transaction tax of 0.001 percent applies on redemption of equity-oriented units, plus a 0.005 percent stamp duty on purchases and switch-ins. Small, but they exist and interviewers ask.
   5. Set-off and carry-forward: short-term losses can be set against both short and long-term gains, long-term losses only against long-term gains, and unabsorbed losses carry forward eight years if the return is filed on time.
   6. The practical consequence for advice: the twelve-month line plus the 1.25 lakh exemption is the single most valuable planning tool a distributor has. Harvest gains up to the exemption each year, and never let a client redeem in month eleven when waiting four weeks moves him from 20 percent to 12.5.

   Where candidates lose it

   Quoting the pre-July-2024 rates of 10 and 15 percent. That dates you instantly and is the most common error on this question in 2026. Also know the 65 percent definition — if you cannot say why an arbitrage fund gets equity taxation, you do not really know the rule.

   Expect next

   • Which hybrid funds qualify as equity-oriented?
   • How do you use the 1.25 lakh exemption?
   • How are losses set off and carried forward?
2. 064How is a debt mutual fund taxed now, and what changed in April 2023 and again in July 2024?TaxationHardtechnicalIndian AMCsWealth and advisory

   Say this

   For units of a specified mutual fund bought on or after 1 April 2023, all gains are treated as short-term and taxed at the investor's slab rate, with no indexation and no holding-period benefit. That single change destroyed the tax advantage debt funds had over fixed deposits, and July 2024 then restored a long-term route for older units.

   Then walk it

   1. Before April 2023: a debt fund held over three years got long-term treatment at 20 percent with indexation, which in a 6 percent inflation environment often meant an effective rate in single digits. That was the whole reason institutions and high earners used debt funds instead of deposits.
   2. The Finance Act 2023 introduced the specified mutual fund category — broadly, schemes not holding more than a set proportion in domestic equity — and made all gains on units acquired from 1 April 2023 taxable at slab rates as short-term, whatever the holding period.
   3. July 2024 added a second layer. For units bought before 1 April 2023, holding beyond twenty-four months now gets 12.5 percent without indexation. Indexation is gone across the board, so grandfathered units get a lower rate but lose the inflation adjustment.
   4. The definition of a specified mutual fund was then refined to key off holding more than 65 percent in debt and money market instruments, which pulled some funds — international feeders, certain gold and multi-asset products — out of the punitive bucket and gave them a 24-month long-term route at 12.5 percent.
   5. Consequences you can see in the flow data: a surge into arbitrage funds and equity savings funds, which get equity taxation for a similar risk profile, and renewed interest in target maturity products held to maturity where the pre-tax yield still competes.
   6. How I would answer it honestly in an interview: state the three dates, say indexation is gone, and add that the definition has moved twice in three years so you always check the current position before advising. Confident recall of a superseded rule is worse than saying that.

   Where candidates lose it

   Still quoting indexation benefits on debt funds. Indexation is gone and quoting it is the single clearest sign a candidate learned this from pre-2023 material. The second trap is confidently reciting a definition that has since changed — flag that the rules have moved twice.

   Expect next

   • Why did arbitrage fund AUM grow after this change?
   • Does a fixed deposit now beat a debt fund on tax?
   • What is a specified mutual fund?
3. 065How are hybrid, gold and international funds taxed, and what is the 65 percent test doing?TaxationHardtechnicalIndian AMCsWealth and advisory

   Say this

   Everything turns on portfolio composition, not on the scheme's name. At least 65 percent in domestic equity gets equity taxation. More than 65 percent in debt and money market instruments gets the punitive specified mutual fund treatment. Anything in between falls into a third bucket with a 24-month long-term period at 12.5 percent.

   Then walk it

   1. Bucket one, equity taxation: aggressive hybrid at 65 to 80 percent equity, arbitrage funds, equity savings funds. Twelve-month long-term period, 12.5 percent above the exemption, 20 percent short-term.
   2. Bucket two, specified mutual funds: conservative hybrids and plain debt schemes with more than 65 percent in debt and money market. Slab rate as short-term gains, no holding-period relief on units bought from April 2023.
   3. Bucket three, the middle: gold funds and gold ETFs, international funds and feeders, and multi-asset funds that hold, say, 50 percent equity, 30 percent debt and 20 percent gold. These are neither equity-oriented nor specified, so they get a 24-month long-term holding taxed at 12.5 percent, and slab rate before that.
   4. Physical gold and gold ETFs are treated differently from a gold fund of funds, and sovereign gold bonds were different again, which is why 'how is gold taxed' is never one answer. Ask which wrapper first.
   5. The design lesson is that AMCs now build products to land in a particular tax bucket. A multi-asset fund is often engineered to hold exactly enough domestic equity to cross 65 percent, and a balanced advantage fund hedges to keep gross equity above the line while net equity is far lower.
   6. So when comparing two funds that look similar, check the actual equity proportion in the last disclosed portfolio. Two multi-asset funds can sit in different tax buckets, and on a 20 lakh gain that difference is worth lakhs.

   Where candidates lose it

   Answering by scheme name. A multi-asset fund is not one tax treatment, it is three possible ones depending on composition. The strong answer starts with 'it depends on the portfolio, not the label' and then gives the three buckets.

   Expect next

   • How is a gold ETF taxed against a gold fund of funds?
   • Why do AMCs engineer portfolios around 65 percent?
   • How would you check which bucket a multi-asset fund is in?
4. 066Is a switch between two schemes of the same AMC a taxable event? And what are STT, stamp duty and TDS on mutual funds?TaxationIntermediatetechnicalIndian AMCsDistribution and sales

   Say this

   Yes, a switch is a redemption plus a purchase, fully taxable, and exit load applies on the redemption leg. That is true even between two plans of the same scheme, so a regular-to-direct switch triggers capital gains too. The transaction taxes are small but real: stamp duty on the way in, STT on the way out of equity schemes.

   Then walk it

   1. Switch and STP both work the same way — one redemption, one purchase, on the same day. There is no roll-over relief in Indian mutual fund taxation. A weekly STP is fifty-two taxable redemptions a year.
   2. Stamp duty: 0.005 percent on every purchase and switch-in of units, in force since July 2020. On a 10 lakh purchase that is 50 rupees, so it matters only for very high-frequency treasury flows.
   3. Securities transaction tax: 0.001 percent on redemption of equity-oriented scheme units. Debt schemes are outside STT.
   4. TDS: on IDCW payouts to resident investors, 10 percent above a threshold that was raised to 10,000 rupees a year. On capital gains for residents there is no TDS — the investor pays through advance tax and the return.
   5. For non-residents the position is different and this is a favourite follow-up: TDS is deducted at source on both IDCW and capital gains for NRIs, at rates depending on the type of gain, and treaty relief has to be claimed with a tax residency certificate.
   6. The advisory point that falls out of all this: never rebalance casually. Every reallocation between schemes is a tax event, which is precisely why a single dynamic asset allocation fund can be efficient for a client who would otherwise be switching twice a year.

   Where candidates lose it

   Saying a switch inside the same AMC, or between direct and regular plans of the same scheme, is tax-neutral. It is not, and this error produces angry clients and complaints. Also know that STT applies only to equity-oriented schemes.

   Expect next

   • Is TDS deducted on an NRI's redemption?
   • How does that change how you rebalance a portfolio?
   • Does stamp duty apply to an SIP instalment?

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.