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10/09/2017 How are your mutual fund returns taxed - The Economic Times

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How are your mutual fund returns
By Aakar Rastogi, ECONOMICTIMES.COM | Oct 31, 2016, 11.23 AM IST

The returns earned from mutual funds are taxed
under the head 'Income from Capital Gains.'

Many mutual fund investors are a bit confused
about the taxation of returns from investments.
Investment experts are always busy answering
questions like should I pay tax on my mutual
funds or will my investment qualify for a tax
deduction. Experts say the different treatment of MF returns for calculating the SPOTLIGHT
tax liability is the main reason for the confusion.

The returns earned from mutual funds are taxed under the head 'Income from
Capital Gains.' And capital gains can be short-term or long-term based on the
holding period of investments. And tax rates are different for both. Moreover,
the capital gains rules are different for equity and non-equity schemes.

All that sounds too confusing? Don't worry. We will make it easy for you.

Taxation of equity schemes
A mutual fund scheme qualifies to be taxed as an equity scheme if it invests at Firms give bereavement leave
least 65 per cent of the total corpus in equity and equity related instruments. to help staff cope with loss
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Returns from an equity mutual fund are treated as long term capital gains if provide support to employees through v
investments are held for more than a year. Such returns are completely exempt counselling, if required, for their emotional
from income tax according to the current laws.
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However, if investments are held for one year or less, the returns are taxed Potential social cost of a 100% e-vehicle
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under short term capital gains. Such returns are taxed at 15 per cent.

Taxation of debt schemes
Mutual fund schemes that invest less than 65 per cent of the corpus in equity
are categorised as non-equity funds for the purpose of taxation. Your debt
mutual funds fall under this category.
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Also, gold funds, fund of funds, international funds, etc are categorised as non- Sebi may bring in rules for merger of mutual fund
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Returns from non-equity funds are treated as long-term capital gains if mutual fund investments

investments are held for more than three years. And the returns are taxed at 20 Top 10 mutual fund managers who created the most
per cent with the indexation benefit. Indexation is a procedure of inflating the wealth for investors

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If investments are held for three years or less, the returns are treated as short- More »
1 How are your mutual fund returns taxed
term capital gains. Such gains are added to the income and taxed as per the 1/3

Comments (8) Add Your Comments From Around the Web Sponsored by 10 Days Hair Oil . mutual fund houses pay Dividend Distribution Tax of 28.67 14. Units purchased in June 2016 will complete one year for the purpose of taxation only in June 2017.85 7.Returns less then 1 year are absolute and above 1 year are annualised.08 13. However.36 N. making it clear whether the scheme qualifies to be an equity fund or a debt fund.3000 1 Order How are your now. Needless to say. Taxation of hybrid schemes Hybrid schemes can be either equity-oriented or debt-oriented.17 1. For example. you are purchasing certain number of units every month or quarter and the period of holding has to be calculated individually for all these purchases. your dividends from debt funds are taxed.The Economic Times income tax rate applicable to the investor.indiatimes.A.01 1. » More .67 14. Start SIP 10Y G-Sec Fund Direct-Growth Gilt Medium & Long Term . You don't have to pay any tax on them as dividends are exempt from income tax in the hands of the investor in both equity and a debt schemes. READ MORE ON » Tax Return Filing Taxation Short Term Capital Gain Non Equity Schemes Mutual Funds MF Long Term Capital Gain Equity Funds Top Mutual Funds Top NPS Top ULIPs Top ETFs Top Listed Bonds EQUITY HYBRID DEBT ALL SCHEME NAME RATING 1M 3M 6M 1 YR 3 YRS (%) (%) (%) (%) (%) Reliance Gilt Securities Direct-G ★★★★★ 0.10/09/2017 How are your mutual fund returns taxed . How to calculate the holding period? 8 Holding period is determined from the date of purchase of mutual fund units till the day you sell them.66 10. How are dividends taxed? If you have invested in a mutual fund scheme under the dividend option.84 per cent on dividends declared under debt schemes.cms 2/3 . mutualCash on delivery fund returns taxed Two Wheeler Insurance . In that In case of a Systematic Investment Plan (SIP).73 Direct-G FEATURED DSP BlackRock Constant Maturity ★★★★★ 0. you have started an SIP in an equity scheme from January to June 2016.85 7.21 1. Happy Customers & 100+ available with free shipping! Plan starts @ Rs 999 Reviews http://economictimes. you may receive dividends.Top rated funds sorted on 3 years return.03 12.69 11.09 Reliance Gilt Securities Direct ★★★★★ 0. you should pay attention to this factor while investing in a hybrid scheme because the tax liability is very different for equity and non- equity schemes.21 6. not January 2017.19 7.69 11.09 Defined Maturity Date-G SBI Magnum Gilt Long-term ★★★★★ 0.21 1. The scheme information document would clearly specify the investment pattern.

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