News shortcuts: From the Courts | Top Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | Professional Updates | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax | PPE Safety Kit SITRA Approved | PPE Safety Kit
Direct Tax »
 Offline Retail Payments using Cards / Wallets / Mobile Devices Pilot
 CBDT issues guidance note on MAP, stipulates cases where ITAT has passed order
 CBDT issues MAP Guidance for benefit of Taxpayers, Tax Practitioners, Tax Authorities and CAs of India and of Treaty Partners
 Redeemed your MF? It s important to report capital gains or losses in ITR
  CBDT allows income tax authorities to share information with CCI
 Compute tax demand for all assessees by Aug 31, dispose of pending appeals: CBDT chief to taxmen
 Know tax treatment of gains/losses from stock trading
 Clarification in relation to notification issued under clause (v) of proviso to section 194N of the Income-tax Act, 1961 (the Act) prior to its amendment by Finance Act, 2020 (FA, 2020)
 High value transactions, other details that your tax passbook will show Form 26AS
  Check fine for late filing and misreporting income Income Tax Return
 Income tax rules for mutual fund investment: How gains are taxed
 Don't make these mistakes while filing ITR to avoid tax noticea
 Notification No. 49/2020 CENTRAL BOARD OF DIRECT TAXES
 Going to file your Income Tax Return? Know which ITR Form to use
 TDS on Cash Withdrawals: CBDT clarifies on Validity of Exemption Notifications

Income tax rules for mutual fund investment: How gains are taxed
July, 27th 2020

Inflation and taxes are the two monsters that take away a part of returns on your mutual fund investments. You must plan your investments considering both the factors to avoid falling short of money for your goals. Here we will discuss the taxation part of mutual funds. Also keep in mind, tax rules keep on changing. You might need to revisit your mutual fund portfolio regularly to make changes to your investments to factor in any change in taxation rules. Here's how the equity and debt mutual funds are taxed as per current rules :

Taxation of equity-oriented mutual fund schemes

A scheme that predominantly invests over 65% of the portfolio in equity shares in domestic companies is called an equity-oriented mutual fund scheme.

> Long term capital gains on units held for more than 12 months are taxed at 10%, without indexation benefit. Long term capital gains upto 1 lakh are not taxed.

> Short term capital gains on units held for 12 months or less are taxed at a flat rate of 15%.

Taxation of debt mutual fund schemes

Debt mutual funds and schemes that hold lesser than 65% of their total portfolio in equities also follow these taxation rules:

> Long term capital gains on debt mutual fund units held for more than 36 months or three years are taxed at 20% after providing for indexation.

Indexation is a process by which the purchase price of an asset is adjusted in a way to factor in inflation over the years. Indexation brings up the purchase price, reducing the overall gains on the investment for the purpose of taxation, which in turn results in lower taxes. Indexation reduces the tax outgo.

> Short term capital gains on units held for 36 months or less are added to the income of the individual and taxed as per the applicable slab rate.

Home | About Us | Terms and Conditions | Contact Us | PPE Kit SITRA Approved | PPE Safety Kit
Copyright 2020 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting