tax on mutual funds investments in India

  Mutual fund is useful way for saving and generation of income. If you are investing, you like to know rules for tax on mutual funds. Tax on mutual funds: We can divide mutual fund in two categories: Equity oriented mutual fund Non equity oriented mutual fund we can also divide capital gain in two categories: Short term capital gains Long term capital gains Short term capital gains: When units of mutual fund is held for less than 1 year, capital gain arising from sale of mutual fund unit is short term capital gains. Long term capital gains: When units of mutual fund is held for more than 1 year, capital gain arising is long term capital gains.   Tax on Equity oriented mutual fund: Dividend Income: Dividend received is exempt from tax u/s 10 (35) (a). Short term capital gain: Capital gain tax rate is 15% if following conditions are satisfied: Redemption with stock exchange or AMC STT is paid For case other than mentioned above, tax rate is as per income tax slab applicable to person. Long term capital gain: Long term capital gain from equity oriented mutual  fund is exempt from tax u/s 10 (38). Tax on Non equity oriented mutual fund: Dividend income: Dividend income is exempt but dividend distribution tax is deducted by AMC. Read our post on dividend distribution tax to know calculation of...

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