Skip to main content

What are the tax Benefits of investing in Mutual Funds?

What are the tax provisions of investing in Mutual Funds?

                   Investments in Mutual Funds are subject to varied tax benefits and liabilities on dividend, dividend distribution and capital gains. Different kinds of mutual fund schemes are subject to different tax provision. It is important to understand the tax provision under various schemes and make informed decision while engaging in mutual fund investments.

"Dividend and Capital gain taxation in the hands of investors in Mutual Fund Schemes from 1 April 2011 (The Finance Bill, 2011 has received assent from the President on 8 April 2011)"

INDIVIDUALSCORPORATESCORPORATESNRI*
From 01.04.2011
to 31.05.2011
From 01.06.2011
Dividend
Equity schemesTax freeTax freeTax freeTax free
Debt schemesTax freeTax freeTax freeTax free
Dividend distribution tax
Equity schemesNilNilNilNil
Debt Scheme(other
than Money market
and Liquid schemes)
12.5%+ 5% surcharge+
3% cess
20%+ 5%
surcharge+ 3% cess
30%+ 5%
surcharge+ 3% cess
12.5%+ 5%
surcharge+ 3% cess
13.52%21.63%32.45%13.52%
Money market
and Liquid schemes
25% + 5%
surcharge + 3% cess
25% + 5%
surcharge + 3% cess
30% + 5%
surcharge + 3% cess
25% + 5%
surcharge + 3% cess
27.04%27.04%32.45%27.04%
Long term Capital gains (Units held for more than 12 months)
Equity schemesNilNilNilNil
Debt schemes10% without indexetion
or 20% with indexetion
whichever is lower
+ 3% cess
10% without indexetion
or 20% with indexetion
whichever is lower+5%
surcharge + 3% cess
10% without indexetion
or 20% with indexetion
whichever is lower+5%
surcharge + 3% cess
10% without indexetion
or 20% with indexetion
whichever is
lower + 3% cess
Without indexation 10.30%10.82%10.82%10.300% 3
With indexation20.60%21.63%21.63%20.600% 3
Short term Capital gains (Units held for 12 months or less)
Equity schemes15% flat + 3% cess15% + 5% surcharge
+ 3% cess
15% + 5% surcharge
+ 3% cess
15% + 3% cess
15.45%16.22%16.22%15.450% 3
Debt schemes30% + 3% cess30% +5% surcharge
+ 3% cess
30% +5% surcharge
+ 3% cess
30.9000%33.2175%30.9000%30% + 3% cess
30.90%32.445%232.445%230.900% 3

1. STT @ 0.25% will be deducted on equity funds at the time of redemption and switch to the other schemes
2. For foreign corporates, the rate applicable would be 40% + 2% surcharge + 3% cess i.e. 42.024%
3. The short term/long term capital gain tax will be deducted at the time of redemption of units in case of non-resident investors only

The rates that will be applied by the AMC at the time of redemption would be as follows

Tax Deducted at Source (Applicable only to NRI Investors)
Short termLong term
Equity15.45%Nil
Debt<30.90%20.60%

In terms of section 206AA of the Act, w.e.f. 1st April, 2010 it will be mandatory for every person including a non-resident who is entitled to receive any sum or income or amount, on which tax is deductible, to furnish his/her Permanent Account Number ('PAN'), failing which tax will be deducted at higher of the following rates:
- the rate specified in the relevant provision of the Act;
- at the rate or rates in force i.e., the rate mentioned in the Finance Act; or
- at the rate of 20%.

Furnishing of PAN becomes critical in cases where the gains earned by the investors are taxed at a rate lower than the rate applicable under section 206AA of the Act.

Equity scheme means an "equity oriented fund" which is defined in the Income-tax Act, 1961 ('the Act'), as a fund where the investible funds are invested by way of equity shares in domestic companies to the extent of more than 65% of the total proceeds of such fund.

The expression "money market mutual fund" has been defined under Explanation (d) to Section 115T of the Act, which means a scheme of a mutual fund which has been set up with the objective of investing exclusively in money market instruments as defined in sub-clause (p) of clause (2) of the Securities and Exchange Board of India (Mutual Funds) Regulations,1996.

The expression" liquid fund" has been defined under Explanation (e) to Section 115T which means a scheme or plan of a mutual fund which is classified by the Securities and Exchange Board of India as a liquid fund in accordance with the guidelines issued by it in this behalf under the Securities and Exchange Board of India Act, 1992 or regulations made thereunder.

 
 
 
---------------------------------------------
Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

 

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

 

1.       ICICI Prudential Tax Plan

2.       Reliance Tax Saver (ELSS) Fund

3.       HDFC TaxSaver

4.       DSP BlackRock Tax Saver Fund

5.       Religare Tax Plan

6.       Franklin India TaxShield

7.       Canara Robeco Equity Tax Saver

8.       IDFC Tax Advantage (ELSS) Fund

9.       Axis Tax Saver Fund

10.    BNP Paribas Long Term Equity Fund

 

Invest in Tax Saver Mutual Funds Online -

Invest Online

Download Application Forms

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

---------------------------------------------

Leave your comment with mail ID and we will answer them

OR

You can write to us at

PrajnaCapital [at] Gmail [dot] Com

OR

Leave a missed Call on 94 8300 8300

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

Popular posts from this blog

ICICI Prudential Dynamic Plan Invest Online

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   ICICI Prudential Dynamic Plan             Invest Online This fund does remarkably well during falling markets, but fails to show the same prowess during a rising market. The fund sticks to its mandate to adapt to the dynamic nature of the market by shuttling between debt and equity. It takes aggressive asset calls in equity when the market surges by investing in quality mid-cap stocks. At the same time, it adopts a defensive strategy by investing in debt and cash when markets get overvalued, making it a good long-term choice.     For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call     Leave a missed Call on 94 8300 8300   Leave your comment with mail ID and we will ...

Lump Sum or SIP?

Invest Mutual Fund Online     You have a lump sum in hand and you wish to invest in equity funds. However, you have heard a lot of talk about investing in equity funds through Systematic Investment Plans (SIPs) because they help average costs, ensure you do not ill-time the market, and help you invest in small sums, besides giving you many other advantages. So, should you invest the money you have in hand in one go, or let it remain in your bank account and then do an SIP? There is no harm in investing a lump sum amount. For all you know, compounding, over the long term, could work better with lump sum. However, make sure you fulfill all of these three criteria if you want to invest in one go. Else, SIP is the way to go. #1: You invest for the long term According to past data, ideally, if you have a time frame of 12 years or more, you can consider lump sum investing (provided you satisfy the other two conditions that follow). So, what is the sanctity behind 12 years? Is it because only...

ICICI Lombard to provide weather cover in 10 states

ICICI Lombard General Insurance Company has been given the mandate to provide weather-based crop insurance for rabi season (2010-11) in Madhya Pradesh, Bihar,Tamil Nadu, Karnataka, West Bengal, Chhattisgarh, Jharkhand and Himachal Pradesh.    The insurance company will cover 69 districts — 30 loanee districts (farmers who have taken loans) and 39 non-loanee districts. The major crops that ICICI Lombard covers for the season are winter paddy, cotton, wheat, mustard, barley, maize, onion, potato, tomato, lentil, peas, arhar, jowar, fenugreek, coriander, cumin, methi, isabgol, brinjal among other crops.    Weather-based crop insurance provides cover against weather-related risks such as excess or deficit rainfall, variations in temperature and fluctuations in humidity. This scheme facilitates immediate compensation based on certified data collected from independent third party bodies such as Indian Meteorological Department ( IMD ) and National Collateral Management Services Ltd. ( NC...

Mutual Fund Review: Reliance Regular Savings Balanced

Reliance Regular Savings Balanced fund has shown great resilience during market crash After a shaky start, this fund has established itself as a strong contender in this space. In the past three years it has ridden the market well by not only delivering during the market run-ups but also displaying resilience during the crash. In 2008, it witnessed the second lowest fall among its category and last year it was amongst the top three performers with a return of 76 per cent (category average: 61%).   The poor underperformance in 2006 can well be credited to the low equity allocation of the fund, which stood at just over 10 per cent for only four months that year. Though the fund has the leeway to go up to 75 per cent in equity, it has never touched that limit. In fact, it has exceeded 70 per cent in just five months in its entire history. During the crash of 2008, the fund managers had no problem going right down to 54 per cent (equity exposure). Fund managers Omprakash Kukian and A...

Feeder funds are the cheapest way to invest in gold

Buy Gold Mutual Funds Invest Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Call 0 94 8300 8300 (India)   There are four ways to put your money in gold — buying physical gold/jewellery , putting money in gold exchange-traded funds ( ETFs ), investing in a gold savings fund and going for the National Spot Exchange's e-gold. Now, some gold ETFs and e-gold even allow taking physical delivery of gold at the end of investment tenure. That might sound good if you wish to possess physical gold. But, given the firm price of gold today (almost ~31,000 per 10g), it is important that gold is bought through acost-effective avenue. Reason: Investing comes at a price. Add to that, India's gold buying is expected to decline in 2012 and 2013, according to the latest World Gold Council ( WGC )report. WGC Director Vipin Sharma feels gold imports may drop to 800 tonnes from 967 tonnes last year. And the mix between the jeweller...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now