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: TAX RATES - GOODS TAXABLE @ 4% :: TDS :: due date for vat payment :: ACCOUNTING STANDARD :: articles on VAT and GST in India :: VAT RATES :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: form 3cd :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT Audit :: empanelment :: list of goods taxed at 4% :: cpt
 
 
News Headlines »
 GST Council fails to break deadlock over indirect tax regime, next meet on Dec 11 and 12 to hammer out differences
 Invoking Writ Jurisdiction For Income Tax Matters
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful
 Your deposit may draw income tax notice
 Accepting payment under IDS 2016
 New disclosure scheme could see 50% tax and 4-year limit on cash use for unaccounted deposits
 Pay 50% tax on unaccounted deposits, or 85% if caught, says Modi government
 Deadline to pay property tax in old currency extended
 Cabinet clears amendments to Income Tax Act

Funds come with several tax benefits
April, 15th 2014

Mutual funds come with several advantages — some are inherent in their structure while others because of taxation rules set by the government — which give them an extra edge and make them a very strong investment product for wealth creation.

Here are some of them:

Use systematic investment plans (SIPs)


Under this route, you invest a fixed sum of money in a scheme either every month or quarter. This particular route to invest in mutual funds inculcates investment discipline and also brings in the power of compounding. This is a very good tool for building wealth in the long run. For example, if you invest Rs 5,000 every month in an equity scheme with growth option for 10 years, during which period the fund gives an average annual return of 15%, your total corpus at the end of the tenth year will be about Rs 13.76 lakh. If you extend that period to 15 years, the corpus would be about Rs 33.4 lakh.

No need to pay long-term capital gains tax

If you have invested in mutual fund units and want to redeem them, and if you have remained invested in the fund for more than a year, you will not be required to pay any capital gains tax if you make any profit during your period of investment. This is because while trading in listed stocks, all the mutual funds pay securities transaction tax and hence they are exempt from paying longterm capital gains tax.

Dividend is tax-free too

If you have your investments in dividend option of mutual fund schemes, then the dividend you receive is tax-free in your hands. This is because when a mutual fund decides to pay a dividend in any of its scheme, it pays a dividend distribution tax to the government, and hence the payout in your hands in totally tax-free.

You can enjoy indexation benefit

An investor in debt mutual funds can take advantage of this rule that has been put in place to neutralize the negative effect of inflation on his/her investment. It works like this: Once you have made some profit by investing in a debt fund over a year or more, you can use the indexation rules to see how much your investments are worth now after neutralizing the impact of inflation. After this, if you are still in profit, you will pay income tax at the rate of 20%. On the other hand, if you don't want to use indexation benefit, you would pay tax at the rate of 10% on your profit. So as an investor, you have the option to see under which of the two methods your tax liability is less and you adopt that method to calculate your taxes.

Next week

In our next edition, we will take up some of the great wealth-creation advices from legendary investor Warren Buffet, and explain the relevance of those sayings for a peaceful financial life.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Development Software Programming Software Engineering Custom Software Development Requirement Based Software Development Software Solutions Software Serv

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