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%
Other Links
Types of Mutual
Funds
Idle Money
