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.
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