Mutual funds are instruments that pool in savings of various investors to invest them in shares, debt securities,money market securities etc.
Mutual funds further invest your money in :
- Debt Instruments – Debt Mutual Funds.
- Equity – Equity Mutual Funds.
You have been advised many times to invest your money in mutual funds by various experts.But,are you aware of the mutual fund taxation procedure.
Here we have simplified things for you to answer your queries regarding :
What is Tax on mutual fund ?
What is Short term Capital Gain and Long term Capital Gain in relation to Equity funds ?
What is Short term Capital Gain and Long term Capital Gain on Non-Equity funds ?
How these Capital Gains on mutual funds are taxed ?
Here is the answer to all the above queries in a simplified manner.
Just,go through the below char,you will get t to know how Capital Gains from mutual funds are taxed in the short term and the long term :
Tax on Mutual Funds
| Period of Holding | Tax rate | |
|---|---|---|
| Equity funds : | ||
| STCG - Short term Capital Gain | MF units held for less than 1 year | 15% |
| LTCG - Long term Capital Gain | MF units held for > 1 year | Taxable @ 10% where LTCG>1 lakh (No indexation benefit) : As per amendment in Budget 2018 |
| Non-Equity funds | ||
| STCG - Short term Capital Gain | MF units held for less than 3 years | As per Individual tax slab rates |
| LTCG - Long term Capital Gain | MF units held for > 3 years | 20% (with indexation) |
| By Fintrakk.com |
Download in pdf format : Tax on mutual funds
Also,go through our popular blog posts : What is SIP ? What are the benefits of investing through SIP and 7 Best Long term Investment options in India.
View Comments (4)
Hey,I liked this blog.Some really useful Finance articles.Many thanks for sharing them with us.Keep up the good work.
I am retired senior citizen.My pension income is only 13272 yearly.If I make short term gain from stock,mutual fund etc.This short term capital gain is taxable or not .Total income including capital gain is below taxable limit.
I think if your total income including STCG is below exemption limit then you are not liable to any tax.
Every mutual fund investor requires to know this tax if he actively invest in the market. This will be very beneficial for him.