Do mutual fund scheme mergers put an extra tax burden on investors?

A merger of mutual fund schemes does not induce any tax liability for an investor. Investors are liable to taxation only when they make a redemption. So if you would have decided to stick with the new scheme, your investment must have automatically transferred to the new scheme and there is no tax liability. You will be taxed when you redeem your mutual fund. For the purpose of calculating capital gains at that time, the original date of purchase and cost (of the old scheme) is considered.

Source: https://www.valueresearchonline.com/stories/51029/do-mutual-fund-scheme-mergers-put-an-extra-tax-burden-on-investors/

 

Further Reading: 

• https://economictimes.indiatimes.com/wealth/tax/how-to-calculate-long-term-capital-gains-on-equity-mutual-funds-after-re-categorisation/articleshow/63909130.cms
  
• https://www.livemint.com/Money/ftVNz3QiwpqVgH68PdZYnL/Mutual-fund-scheme-mergers-wont-put-extra-tax-burden-on-inv.html
• https://www.financialexpress.com/money/mutual-funds-redeemed-mutual-fund-units-soon-after-transmission-know-the-tax-implications-2345136/