Income From Mutual Fund Comes Under Which Head

The nature of the investment whether it is a debt fund or an equity fund determines the exact tax impact on the investor.

Income from mutual fund comes under which head. There are two mutual fund investments in the form of equity linked savings schemes elss and pension plans offered by the funds that are eligible for a deduction under section 80c. It s important to note that under the income tax act 1961 there is mention of only one type of mutual fund. Ddt on debt mutual funds is 28 84 once the dividend is paid by the fund house the nav of that scheme falls to that extent. In a debt mfs capital gains earned on investments held for under three.

In so far as the revenue s appeal for the assessment year 2011 12 is concerned the only ground raised is that learned commissioner appeals has erred in law in directing the assessing officer to treat the profit of rs. These are mutual funds schemes that are invested in stocks and come with a mandatory lock in period of three years. Though a mutual fund is technically a type of investment company the term is most often used to. It implies that from income tax angle mutual fund schemes can be categorized into a equity oriented fund scheme b non equity oriented fund scheme.

Dividends and income from mutual funds income from other sources income from dividends and income from mutual funds is fully exempted from income tax. The dividend income received by a debt fund unit holder is also tax free. A mutual fund is a type of highly liquid security that s highly popular among retail investors. There are two ways in which you can receive income from a mutual fund one is the dividend income and the other is the dividend re investment method.

There are some mutual funds schemes that offer tax savings and are called elss or equity linked savings schemes and these are eligible for deduction under section 80c of the income tax act 1961. A dividend received by a shareholder is deemed to be his income for the previous year in which it is declared distributed or paid.