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Mutual
Fund Taxation -
Dividend
/ Gains
Dividend
Tax Free Income
Dividend
income in the hands of the Investor / MF holder is totally exempt from
income-tax.
Dividend
Distribution Tax
However the Mutual
Fund is required to pay dividend distribution tax as under :
1.
12.5 % on income tax Act , on income distributed by a money market mutual
fund or a liquid fund
2.
12% and 1.5% on income distributed to any person being an individual or a
Hindu undivided family by a fund other than a money market fund or a
liquid fund
3.
20% on income distributed to any other person by a fund other than a money
market mutual fund or liquid fund.
Tax
Advantage
- Mutual Funds
Mutual Funds in India being promoted by International Funds, Public
& Private Sector Banks & leading Corporate Houses are becoming
first choice for Equity participation by resident as also NRI investors
building up a huge corpus of Rs. 3,00,000 crores of which a whooping one
third are now invested in equity schemes.. The Government is playing its
own part of an Encouraging Patron - by offering various tax
exemptions to investments in MF Schemes. Yes! the Topping on excellent
MF Gains is - Total Tax Exemption of Dividend income and Long Term Gains
i.e. profit arising after holding of more than Twelve months. The
Tax Structure of MF Gains is as under:
| 01. |
Long
Term Gains of Equity Schemes |
Tax 0% |
Tax
Deduction (TDS) 0% |
| 02. |
Short
Term Gains of Equity Schemes |
Tax 10% |
TDS 10% |
| 03. |
Long
Term Gains of Debt / Hybrid Schemes |
Tax 10% |
TDS 20% |
| 04. |
Short
Term Gains of Debt / Hybrid Schemes |
Tax 0%
to 30% |
TDS 30% |
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