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Snapshot Of Taxation Aspects Of Mutual Funds:


Snapshot – Mutual Funds & Taxation

Taxation aspects in mutual funds depends on:

Type of mutual fund scheme:Equity oriented,Debt,Money market or Liquid schemes.

Type of investor: Individual,Domestic Company,NRI.

Duration Of Investment : Short term [Less than 12 Months], Long Term [more than 12 Months].

Type of income received : Dividend , Capital gains.

  • Tax Implication on Dividend Received by Unit holder:
Type Of Scheme Individual Domestic Company NRI
Equity Oriented Nil Nil Nil
Debt Oriented Nil Nil Nil
  •  Tax implications for MF Scheme on distributed Surplus:
Type Of Scheme Individual Domestic company NRI
Equity Oriented Nil Nil Nil
Debt 12.5% + 5%Surcharge + 3%Cess=13.519% 30% +5% surcharge + 3% Cess= 32.445% 12.5% +5% Surcharge + 3% Cess=13.519%
Money Market / Liquid Schemes 25%+5%Surcharge +  3%Cess=27.038% 32.445 [Including Surcharge + Cess] 25%+Surcharge + Cess=27.038%
  •  Capital Gain Taxation aspects:

Long Term Capital Gain tax:

Fund Type Individual Domestic Company NRI
Equity Oriented Nil Nil Nil
Other Than Equity Oriented fund. 10% without Indexation + 3% Cess = 10.30%..OR20% without Indexation + 3% cess = 20.60% 10% without indexation + 5% Surcharge + 3% Cess=10.815%.OR20% without Indexation + 5% Surcharge + 3% cess=21.630% 10% without Indexation + 3% Cess = 10.30%. OR20% without Indexation + 3% cess = 20.60%

Short Term Capital Gain Tax :[Holding of units for a period of less than 12 months]:

Scheme Individual Domestic Company NRI
Equity Oriented 15% + 3% Cess=15.450% 15%+5%Surcharge+3%Cess

=16.223%

15% + 3% Cess=15.450%
Other Than equity oriented As per tax bracket of investor + 3% cess 30% + 5% SC + 3% Cess

=32.445%

As per tax bracket of investor + 3% cess

Tax Deducted at Source [Only for NRIs]:

Scheme Short Term Capital Gain Long term Capital Gain
Equity Oriented 15.45% Nil
Other than Equity oriented 30.900% 20.600% [Afer indexation]
  •  While computing long term / short term capital gains for domestic companies,surcharge of 5% will be levied if total income exceeds Rs. 1 Crore subject to marginal relief.
  • In case of NRIs only,the short term / long term capital gain tax will be deducted at the time of redemption of units.
Dividend Stripping:
 The loss due to sale of units in the schemes where dividend declared is tax free will not be available for set off to the extent of tax free dividend declared If Units are:
A ] bought within 3 months prior to record date fixed for dividend declaration and
B] if units are sold within nine months after the record date fixed for dividend declaration
Clubbing of income:
Income accuring in case of minor child shall be included in the income of parent whose total income is greater.When the child attains majority, the tax liability will be on the child.

Category: Mutual Funds

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