{"id":993,"date":"2017-06-16T14:43:49","date_gmt":"2017-06-16T14:43:49","guid":{"rendered":"http:\/\/blog.kuvera.in\/?p=993"},"modified":"2020-11-23T04:04:50","modified_gmt":"2020-11-23T04:04:50","slug":"mutual-funda-mutual-fund-taxation","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/mutual-funda-mutual-fund-taxation\/","title":{"rendered":"Mutual Funda: Mutual Fund Taxation"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_40 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" area-label=\"ez-toc-toggle-icon-1\"><label for=\"item-69d7c28992a0d\" aria-label=\"Table of Content\"><span style=\"display: flex;align-items: center;width: 35px;height: 30px;justify-content: center;direction:ltr;\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/label><input  type=\"checkbox\" id=\"item-69d7c28992a0d\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/kuvera.in\/blog\/mutual-funda-mutual-fund-taxation\/#Equity_Oriented_Mutual_Fund_Taxation\" title=\"Equity Oriented Mutual Fund Taxation\">Equity Oriented Mutual Fund Taxation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/kuvera.in\/blog\/mutual-funda-mutual-fund-taxation\/#Taxation_on_Sale_of_Other_than_Equity_Oriented_Mutual_Funds\" title=\"Taxation on Sale of Other than Equity Oriented Mutual Funds\">Taxation on Sale of Other than Equity Oriented Mutual Funds<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/kuvera.in\/blog\/mutual-funda-mutual-fund-taxation\/#Taxation_on_Dividend_Income\" title=\"Taxation on Dividend Income\">Taxation on Dividend Income<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/kuvera.in\/blog\/mutual-funda-mutual-fund-taxation\/#Tax_is_deductible_by_the_Mutual_Fund_scheme_for_Non-Resident_Investors\" title=\"Tax is deductible by the Mutual Fund scheme for Non-Resident Investors\">Tax is deductible by the Mutual Fund scheme for Non-Resident Investors<\/a><\/li><\/ul><\/nav><\/div>\n<p><a href=\"http:\/\/blog.kuvera.in\/mutual-funda-mutual-fund-taxation\/mutualfundtaxationfinal\/\" rel=\"attachment wp-att-997\"><img loading=\"lazy\" class=\"aligncenter size-full wp-image-997\" src=\"https:\/\/blog.kuvera.in\/wp-content\/uploads\/2017\/06\/MutualFundTaxationFinal.jpg\" alt=\"Mutual Fund Taxation\" width=\"960\" height=\"480\" srcset=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2017\/06\/MutualFundTaxationFinal.jpg 960w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2017\/06\/MutualFundTaxationFinal-300x150.jpg 300w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2017\/06\/MutualFundTaxationFinal-768x384.jpg 768w\" sizes=\"(max-width: 960px) 100vw, 960px\" \/><\/a>To understand Mutual Fund taxation, classify Mutual Fund investments into two categories. Equity oriented Mutual Fund investments and Other Than Equity Oriented Mutual Funds.<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Equity_Oriented_Mutual_Fund_Taxation\"><\/span><strong>Equity Oriented Mutual Fund Taxation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<table>\n<tbody>\n<tr>\n<td width=\"114\"><strong>If Exit<\/strong><\/td>\n<td width=\"244\"><strong>Before 12 months<\/strong><\/td>\n<td width=\"244\"><strong>After 12 months<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"114\"><strong>Applicable Tax<\/strong><\/td>\n<td width=\"244\">Short Term Capital Gains Tax <strong>(STCG)<\/strong><\/td>\n<td width=\"244\">Long Term Capital Gains Tax <strong>(LTCG)<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"114\"><strong>Tax Rate<\/strong><\/td>\n<td width=\"244\">15% + surcharges + cesses as applicable<\/td>\n<td width=\"244\">10% on LTCG above Rs 1,00,000 in a Financial Year<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Equity Oriented Mutual Fund exits within a year will have STCG\u00a0tax implications or\u00a015% + surcharges + cesses as applicable.<\/p>\n<p>LTCG\u00a0tax on Equity Mutual Funds are 10% on LTCG above Rs 1,00,000 in one Financial Year. From April 1, 2018 onwards,\u00a0<strong>Finance Act, 2018 introduced\u00a0Section 112A to provide that long term capital gains arising from transfer a unit of an equity oriented fund shall be taxed at 10% without indexation and without foreign currency fluctuation benefit of such capital gains exceeding one lakh rupees<\/strong><\/p>\n<p><a href=\"http:\/\/blog.kuvera.in\/elss-the-smart-way-to-save-tax\/\">ELSS Schemes<\/a>\u00a0are equity oriented but they are an exception. They are designed as instruments for tax saving with a 3 year lock-in.<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Taxation_on_Sale_of_Other_than_Equity_Oriented_Mutual_Funds\"><\/span><strong>Taxation on Sale of Other than Equity Oriented Mutual Funds<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<table>\n<tbody>\n<tr>\n<td width=\"114\"><strong>If Exit<\/strong><\/td>\n<td width=\"244\"><strong>Before 36 months<\/strong><\/td>\n<td width=\"244\"><strong>After 36 months<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"114\"><strong>Applicable Tax<\/strong><\/td>\n<td width=\"244\">STCG Tax<\/td>\n<td width=\"244\">LTCG\u00a0Tax<\/td>\n<\/tr>\n<tr>\n<td width=\"114\"><strong>Tax Rate<\/strong><\/td>\n<td width=\"244\">STCG\u00a0are added to the individual\u2019s taxable income.Tax is payable at the individual\u2019s applicable tax slab<\/td>\n<td width=\"244\">15% (20% with indexation) plus surcharges and cesses as applicable<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>STCG\u00a0tax will apply if Other Than Equity Oriented Mutual Funds are exited within 36 months. In this case, the STCG\u00a0should be added to the individual\u2019s taxable income. Tax payable is computed using the tax slab applicable to the individual.<\/p>\n<p>LTCG\u00a0tax on Other Than Equity Oriented Mutual Funds are 15% (20% with indexation) plus surcharges and cesses as applicable.<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Taxation_on_Dividend_Income\"><\/span><strong>Taxation on Dividend Income<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>Dividends are taxable in the hands of the investor from starting 01-Apr-20, as per the FY20-21 budget. Also, Mutual Funds shall no longer pay Dividend Distribution Tax on dividends received by them.<\/p>\n<p>Earlier, any dividend received from Mutual Funds was tax free in the hands of the individual while Mutual Funds had to deduct taxes(DDT) from the dividend received by them. There was no tax on dividends\u00a0 for Equity Oriented Schemes. For other than Equity Oriented Schemes, tax was deducted at 25% + applicable surcharges and cesses.<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Tax_is_deductible_by_the_Mutual_Fund_scheme_for_Non-Resident_Investors\"><\/span><strong>Tax is deductible by the Mutual Fund scheme for Non-Resident Investors<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>For Non Resident Investors, Mutual Funds have to deduct Capital Gains tax\u00a0at the time of redemption of units. In effect, the investor will receive proceeds from a sale net of applicable Capital Gains Taxes.<\/p>\n<p>Refer to the <a href=\"http:\/\/blog.kuvera.in\/?attachment_id=994\">Tax Reckoner for Mutual Funds for this financial year from HDFC Mutual Fund <\/a>for more details. The updated document for <a href=\"http:\/\/www.hdfcfund.com\/CMT\/UPLOAD\/ARTICLEATTACHMENTS\/HDFC%20AMC%20Tax%20Reckoner%202018-19_Final.pdf\">FY 2018-19 can be accessed here<\/a>.<\/p>\n<p>This note is applicable to individuals. It does not cover all details of mutual fund taxation and should be used as a general reference. Do consult a tax expert to understand the exact tax nuances.<\/p>\n<p>We hope this increases your understanding of \u00a0Mutual Fund Taxation. If you have more questions, do write to us on <a href=\"mailto:support@kuvera.in\">support@kuvera.in<\/a>.<\/p>\n<p>You can experience world class investing on India\u2019s friendliest Direct Plan Investment Platform. Just visit <a href=\"https:\/\/www.kuvera.in\">kuvera.in<\/a> and let us work our magic!<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>To understand Mutual Fund taxation, classify Mutual Fund investments into two categories. Equity oriented Mutual Fund investments and Other Than Equity Oriented Mutual Funds. Equity Oriented Mutual Fund Taxation If Exit Before 12 months After 12 months Applicable Tax Short Term Capital Gains Tax (STCG) Long Term Capital Gains Tax (LTCG) Tax Rate 15% + [&#8230;]<\/p>\n<p><a class=\"btn btn-secondary understrap-read-more-link\" href=\"https:\/\/kuvera.in\/blog\/mutual-funda-mutual-fund-taxation\/\">Read More&#8230;<\/a><\/p>\n","protected":false},"author":3,"featured_media":998,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[130],"tags":[137,135,131,132,134,136,133],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Mutual Funda: Mutual Fund Taxation - Kuvera<\/title>\n<meta name=\"description\" content=\"Mutual Funda: Learn about Mutual Fund Taxation and invest wisely. 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