Income Tax On Mutual Funds Maturity

The gains that are generated on redeeming the mutual fund units can be classified as short term or long term capital gains depending on period of holding which is different in case of equity vs non equity mutual fund.

Income tax on mutual funds maturity. 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. 2 5 lakhs and less than rs. Long term capital. If the pan is linked to aadhar this rate is applicable.

A securities transaction tax stt is applicable at the rate of 0 001 on equity oriented mutual funds at the time of redemption of units. However elss funds differ from the regular funds when it comes to the lock in period. Fmps are open for investments only during their new fund offer nfo period and investors can redeem their capital with the income generated only upon the maturity of these funds. These are called tax saving mutual funds or elss equity linked saving scheme.

2 5 lakhs your debt fund stcg is zero. Some mutual funds gives us deduction under section 80c of income tax act 1961. 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. We cover both types of funds one by one.

Get free credit report with complete analysis of credit score check now. From tax perspective the tax on mutual funds fall under income from capital gains. Both tax saver and regular equity funds are considered the same for taxation. Dividend income will be treated as normal income and added to the total income and is taxable at the income tax slab rate.

Additionally mutual funds dividends paid out to a person is more than inr 5 000 is subject to tds tax deducted at source of 10. Income tax on mutual fund. However to provide the element of liquidity fmps are listed as tradeable securities on stock exchanges so that investors have the choice of exiting by selling off their units in the stock exchange. Similarly applicable tax rate will be 5 of total debt fund gains in case taxable income is greater than rs.

The taxability of mutual fund depends on the type of mf if it is a long term equity oriented mutual fund and stt is paid while selling the units of the same it is exempt u s 10 38. In its absence the tds will be 20.