Income Mutual Fund Tax

Equity linked savings scheme elss is a type of equity fund and the only mutual fund scheme which qualifies for a tax deduction of rs.

Income mutual fund tax. 1 5 lakh per annum under section 80c of the income tax act. Ltcg tax is applicable on equity funds at the rate of 10 if the capital gains exceed rs 1 lakh a year and there is no benefit of indexation. Mutual funds that fall under the category of pension and elss will help you with tax savings under section 80c of the income tax act. Both tax saver and regular equity funds are considered the same for taxation.

From april 1st 2020 mutual funds dividends are taxed in the hands of investors at their income tax slab rate. Some mutual funds gives us deduction under section 80c of income tax act 1961. Similarly applicable tax rate will be 5 of total debt fund gains in case taxable income is greater than rs. Income tax on mutual fund.

As per fy 2017 18 ay 2018 19 tax slabs if your taxable income is less than rs. Capital gains tax on mutual funds in india for fy 2019 20 stt on mutual funds. If your mutual fund buys and sells dividend stocks often more than likely any dividends you receive are taxed as ordinary income. This is done to reduce the burden on small investors.

You can claim a deduction up to rupees 1 50 000 only under section 80c. Investing in these funds can reduce our total income however the maximum limit is rs 1 50 000 and a lock in period of 3 years. However long term capital gains attract a tax rate of 20 with the benefit of indexation. An elss comes with a lock in period of 3 years which means an investment made in it cannot be withdrawn before 3 years.

In addition to above there is 0 001 securities transaction tax stt changed from 0 25 from june 2013 is levied on redemption of equity mutual funds irrespective of the holding period there is no stt for non equity mutual funds. However elss funds differ from the regular funds when it comes to the lock in period. 2 5 lakhs and less than rs. 2 5 lakhs your debt fund stcg is zero.

Studies in the past have suggested that equity has delivered higher inflation adjusted return than any other asset class over the longer horizon. Short term gains are taxable at your individual income tax slab rates. In mutual funds indexation is a. For the purpose of income tax an equity oriented mutual fund is the fund which invests at least 65 of its fund corpus into equity and equity related instruments.

A surcharge of 12 on base rate and cess of 4 on base surcharge rate is included in ddt.