Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: due date for vat payment :: VAT RATES :: TAX RATES - GOODS TAXABLE @ 4% :: cpt :: TDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: list of goods taxed at 4% :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT Audit :: empanelment :: ACCOUNTING STANDARDS :: ACCOUNTING STANDARD :: articles on VAT and GST in India :: form 3cd :: Central Excise rule to resale the machines to a new company
 
 
News Headlines »
 E-filing ITR: Govt's income tax website or private websites?
 Income-tax (17th Amendment) Rules, 2017
 GST: One nation, one market, one tax
 Ready or not, businesses brace for biggest-ever tax reform
 Ready or not, businesses brace for biggest-ever tax reform
 Make your inventory and invoicing software GST Ready from Binarysoft
 Filing income-tax returns gets simpler for salaried persons
 Ten rules you must follow while filing income tax returns
 Reforming the income tax tribunal
 How the new system might impact consumers and businesses
 10 ways you get benefited from filing your tax return

Debt fund dividends may go tax-free
December, 18th 2006

Mutual funds and investors would love it, but the banking industry would cry foul the government is actively considering a Budget proposal to exempt debt mutual funds from having to pay dividend distribution tax (DDT) of nearly 14%, including education cess and surcharge.

The rationale behind the move is as follows: equity mutual funds are alredy exempt from DDT and creating a level playing field for debt mutual funds would increase retail participation in the debt market.

Companies pay about 23% as DDT. Since mutual funds are collective investment vehicles, the income they receive from their investment in equities, it was felt, should pass through to investors without attracting tax at the level of the investment vehicle, so as not to discourage people from investing in equities through mutual funds.

Levelling the playing field for debt mutual funds by removing DDT on them would certainly make them more attractive for savers. Income from a fixed deposit with a bank is not tax-free, whereas the same money invested in a debt MF would yield at least the same rate of return and be wholly tax-free, if the proposal goes through.

If DDT on debt mutual funds is removed, it will attract retail investors who currently park their funds as fixed deposits in banks," said an industry expert.

According to data provided by ValueResearch, as on November 30, AUM in equity-oriented mutual funds, which includes equity and hybrid equity mutual funds is Rs 1,14,986 crore.

In comparison, Rs 2,27,558 crore is the AUM in those MFs which are not exempted from DDT. These include balanced equity mutual funds, which have less than 65% of their assets under management (AUM) in equity. DDT is also applicable to capital protection funds, which predominantly invest in debt.

Income from mutual funds falls under two categories dividends and capital gains. As per existing tax provisions, dividend income from equity-based mutual funds is tax-free in the hands of the investor.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - About Us

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions