Mutual Funds Taxation

Taxation of Mutual Funds :

This is a complex issue & I will try to simplify this through a table but initially we need to understand following concepts.

All the Mutual Funds have 2 Options Dividend & Growth. The taxation Depends on Which option you choose

2 Types of taxes will become applicable based on your choice, Capital Gains Tax & Dividend Distribution Tax.

For the below table Pl. assume 3 investments the Table shows the Tax applicable on investments.

Investment A was held for more than 1 year Purchase.

Investment B was held for less than 1 Year Purchase.

Investment C Purchase with Dividend option.

Investment Option	Growth	Growth	Dividend
Investment	A	B	C
Tax Applicable	Long Term Capital Gains Tax	Short Term capital Gains Tax	Dividend Distribution Tax
Equity Mutual Funds	Nil	15%	0%
Balance Funds	Nil	15%	0%
Income Funds	10%	30%$$	13.5%
Debt Funds	10%	30%$$	13.5%
Gilt Funds	10%	30%$$	13.5%
Liquid Funds	10%	30%$$	27.0%
Ultra Liquid Funds	10%	30%$$	13.5%

$$ : The income will be added to your Normal income & taxed @ applicable tax rate assumed here to be 30%

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Types of Mutual Funds

Idle Money