Mutual funds alert! Know these income tax rules and save your money
Mutual fund investment are made with the intent to generate higher returns than debt funds like Public Provident Fund, bank fixed deposits, EPF, Provident fund.
Mutual fund investment are made with the intent to generate higher returns than debt funds like Public Provident Fund, bank fixed deposits, EPF, Provident fund. While debt funds give income tax benefits both on investment and maturity, mutual funds have different tax norms when it comes to maturity. There are different tax norms for different categories — debt, equity — of the mutual funds. In mutual fund investment, an investor has the choice to choose a dividend plan or a simple plan. Change of choice by the investor leads to change of tax outgo norms.
Speaking on the income tax norms applied on various categories of mutual funds, tax expert Sunil Garg said, "In mutual fund dividend plan, the dividend amount comes into the hands of mutual fund investor after the income tax deduction. So, it's very important for the mutual fund investor to know the exact income tax outgo on his or her dividend amount."
See Zee Business Live TV streaming below:
Elaborating upon the income tax outgo on various categories of the mutual funds, Garg said, "In debt mutual funds, if an investor has chosen dividend plan, he or she will have to give 28 per cent tax while in the case of equity mutual fund dividend plan, an investor needs to pay 11 per cent income tax on one's dividend amount." However, Garg made it clear that this income tax outgo on the dividend amount is different from the taxes at the time of maturity or withdrawal of the mutual fund plan. "In the case of mutual fund maturity, if an investor has chosen debt mutual fund, then he or she will have to pay Long Term Capital Gain or LTCG Tax if the investment is more than one year old. Similarly, in the case of equity mutual funds, LTCG Tax gets applied if the investment is more than one year old."
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
SRH vs GT IPL 2024 Ticket Booking Online: Where and how to buy SRH vs GT tickets online - Check IPL Match 66 ticket price, other details
Top 7 SWP Mutual Funds: Rs 50 lakh investment, Rs 70K monthly pension for 10 years, and Rs 42.30 lakh balance value; know more details
Gold and Silver rate today (May 13, 2024): Precious metal under pressure; yellow metal near Rs 72,400, white metal above Rs 84,600
SIP Returns: How Rs 3,000, 5,000, and Rs 10,000 SIPs can help you build retirement corpus of Rs 1.06 cr, Rs 1.77 cr, and Rs 3.53 cr
09:04 PM IST