Wednesday, November 7, 2018

How are mutual funds taxed and taxation of mutual funds for tax free or saving mutual funds in india, canada, us, or other country with tips

Are you want to know about mutual funds taxation and tax free mutual funds then you are on the right place because mutual funds taxation is sometime confusable to beginners for investment and mutual funds taxation is applied on different types of mutual funds differently.  About article for mutual funds taxation In this am going to inform you all about the mutual funds taxation process briefly with simple language and mutual funds taxation is not the same in all banks. so that's why I gave some example of mutual funds taxation in India or other countries. And I also gave the information about which type of mutual funds are tax free and which type of mutual funds are taxable. so you can get known about taxable and non taxable mutual funds. mutual funds taxation, mutual funds taxation 2017-18, mutual funds dividend taxable, mutual funds debt taxation, mutual funds taxation 2018-19, mutual fund taxes capital gains, mutual funds taxation india, mutual funds taxation for nri, mutual funds returns taxable, mutual fund gain taxation, mutual fund gains taxable, mutual funds taxable or not, mutual funds profit taxable, mutual funds interest taxable, mutual fund dividend reinvestment taxation, mutual fund withdrawal taxable, liquid mutual funds taxation, mutual funds taxation rules, mutual funds and taxes, mip mutual funds taxation, mutual fund taxation after budget, mutual funds are taxable or not, mutual fund taxation ay 2017-18, mutual fund dividend taxation india, how mutual funds save taxes, mutual fund sip taxation, mutual funds non taxable, do mutual funds pay taxes, mutual fund earnings taxable, mutual fund redemption taxable or not, mutual fund return taxable or not, mutual funds taxation 2018, mutual funds dividend taxable or not, mutual fund investment taxable or not, mutual funds taxation in budget 2018, mutual funds maturity taxable or not, hybrid mutual funds taxation, mutual fund taxes explained, mutual funds vs etf taxes, mutual fund taxation chart, mutual fund taxation fy 2018-19, mutual funds redemption taxable, debt mutual funds taxation 2017, equity mutual funds taxation india, mutual fund debt schemes taxation, mutual fund exchange taxation, mutual fund profit taxable or not, mutual fund taxable under which head, mutual fund taxation 2014-15, mutual fund taxation 2015-16, mutual fund taxation 2017, mutual fund taxes vanguard, mutual funds and taxation, mutual funds in taxable accounts, mutual funds taxation 2016-17, mutual funds taxation canada, mutual funds taxes on earnings, mutual funds with taxable bonds vs municipal bonds, mlp mutual funds taxation, mutual funds taxation, mutual funds vs etf taxes, mutual fund withdrawal taxable, mutual fund taxes capital gains, mutual funds and taxes, mutual funds dividend taxable, mutual fund taxes explained, mutual fund gain taxation, mutual fund gains taxable, do mutual funds pay taxes, mutual fund exchange taxation, mutual fund dividend reinvestment taxation, mutual funds taxation india, mutual funds taxation 2018-19, mutual funds taxes on earnings, mutual funds returns taxable, mutual funds and taxation, mutual funds taxation 2017-18, mutual fund turnover rate taxes, mutual funds with taxable bonds,

Introduction to mutual funds taxation

Are you want to know about mutual funds taxation and tax free mutual funds then you are on the right place because mutual funds taxation is sometime confusable to beginners for investment and mutual funds taxation is applied on different types of mutual funds differently.

About article for mutual funds taxation

In this am going to inform you all about the mutual funds taxation process briefly with simple language and mutual funds taxation is not the same in all banks. so that's why I gave some example of mutual funds taxation in India or other countries. And I also gave the information about which type of mutual funds are tax free and which type of mutual funds are taxable. so you can get known about taxable and non taxable mutual funds.

Mutual Funds Taxation And Taxation Process Of Mutual Funds


Welcome to mutual fund FAQ where we discuss the basic questions that new investors have about mutual fund this time let's consider how are Mutual Funds taxed now in order to understand this you need to recognize three important factors the first is the difference between an equity mutual fund and non equity mutual funds.

Equity mutual fund is one that holds a minimum of 65% of Indian stocks and to calculate this 65% we should take the annual average of the monkey portfolios disclosed by the fund houses so effin that holds a minimum of 65% on average of Indian stocks is considered an equity mutual fund and they are taxed differently from all another mutual fund which does not hold a minimum of 60% Indian stocks so any phone which does not hold that minimum size of a person is called a non equity fund.

 An equity fund a person taxation rules from a non equity fund the first. The second thing is that as we discussed in the difference between the lump sum and SIP article. Mutual Funds essentially you buy and sell mutual fund units that are all weather you bye bye a city or bhaiya lump sum is essentially the same you are buying units and selling units and therefore the taxation rules will applied to the gain or loss on mutual fund unit that you purchase that's very important to read so doesn't matter but you do SAP or not it's about the taxation who will apply to which mutual fund unit but and the third important point is the taxation rules will apply only when you reading the investment that is when you reset the mutual fund units that you hold back to the pond house and get back the money corresponding to the current value of the doors units.

So the taxation rules apply validation and this is the difference of CI difference between fixed deposit and mutual fund in a fixed deposit you have to pay tax each financial your own the interest certificate and whether you pay tax or not the banks will anyway deduct TDS every financial year so bees three aspects very important to understand how Mutual Funds are taxed so let's now consider an equity Mutual Fund now let's be purchased some minutes less than 100 units of an equity mutual fund on 1st February 2018 then the following rules apply now before I get the rule if you had purchased mutual fund units before February 2015 1st 2018 then the rules are a little different the something called grandfathering that will apply I have described this in a separate article.

To keep the discussion simple and going to talk about taxation rules that apply on the units purchased on or after 1st February 2018 select the you make the Purchase on 1st February 2018 if you're reading any of those units on or before 365 days from the date of purchase then the gain on each unit will be taxed @ 15% with a 4% steps on it sold the 15.6 percent effective tax on each unit gain made before 3 on a before 365 days for an equity mutual fund is known as a short term capital gain if you make redemption after 365 days then if the total capital gain of all such units redeemed in a financial year is less than or equal to 1 lakh then b capital gains tax the capital gain on all units radium the financial year less than or equal to 1 lakh is tax free if the capital gain is greater than 100000 then let's say for example it is 1.5 lac Delhi excess gain above 1 lakh Rs. 5 lakh in this example will be tax @ 10% with 4% safe or 10.4% effective tax rate I hope that clear so in the capital gain is the less than or equal to 1 lakh is tax free if it is above 100000 then the excess capital gain above 1 lakh will be taxed at 10% with four percent or 10.4% effective tax rate.

To do the rules by mutual funds rules article to have a located if you do not understand me. Now coming to non equity mutual funds here the date of purchase doesn't matter the same I just been the same for the past almost 5 years so it's not a problem so database it does not matter here if you redeem any unit purchased from non equity mutual fund on or before 1095 days that is 3 years then the gain on each unit will be taxed as per your Income Tax slab in that financial year of redemption so it again for a non-academic refund will be called as a short-term capital gain if you make a redemption after thousand ninety-five days the capital gain on each unit will be taxed at 20% with a 4% step out of 20. 8% effective tax to calculate the capital gain before you apply the 20% tax the purchase price should be inflated to the current value that is in value in the current financial year this is known as indexation and describe what indexation is in the next life social example.

how indexation should be applied for non equity fund long term capital gain taxation lets see you make a purchase and when you made a purchase the purchase price was rupees hundred per unit and the cost inflation index which is declared by the government each financial year around the middle of the Year around 2 June July or so the cost inflation index was 200 in the financial year of purchase and after 4 years you make redemption and the never knew redeemed rupees under 19 per unit and the current cost inflation index where is after 4 years the cost inflation index in the financial year of production is 256 so now you need to inflate the purchase price to its current value so 100 which is the purchase price per unit into 1 + inflation rate is the inflated purchase price the inflation rate is essential to 50 - 200 / 200 this is the absolute increase in the cost inflation index so the inflated purchase price is availed and become if you put the density just become 100 into 255 200 so this is 125 or to keep it simple the purchase price into the current cost inflation index divided by the cost inflation index in the year of purchase is the inflated purchase price and this is 125 now you calculate capital gain for unitas 190 feet is the price when you sold - inflated purchase price and you pray 20.8 percent tax on this indexed capital gain the actual capital gain is 100 - 190 which is the actual redemption and the actual purchase the national capital gain is Greater know this but you actually pay tax on the indexed capital gain which is The Redemption price minus the indexed purchase price so this is known as indexation.

And this is applied to long term capital gain on debt mutual funds so coming back to this so for non equity mutual funds not just debt funds non equity Mutual Funds are gold funds all kind of debt funds that hold International equity so so So often on equity mutual fund the deductions made one of the 4095 days is considered as a short term capital gain tax office lab beyond that it is any redemption is tax and flat rate of 20% with 4% Sasta 20.8 percent and before you apply this 2020. 8% you need to inflate the purchase price to account for cost inflation and therefore you apply the tax rate on the indexed capital gain now what about dividend from 1st April 2018 onwards in Hindi we should buy equity mutual fund irrespective of the amount will be taxed at source and this is known as a dividend distribution tax this tax rate is 10% 12% surcharge applies on the tax and four persons this applies on the tax and the substances such as so the effective tax rate is 7.684 % on equity Mutual Fund for non equity mutual funds any dividend respective of the amount will also be taxed it's over again this is called a dividend distribution tax at 25% tax + at 12% surcharge and 4% cess on the tax and surcharge resulting in an effective tax rate of 29.1 2% deducted at source so before the dividend is received in your hand DMC would have already made this tax deduction and once you get the dividends in your hands you do not have to pay any further tax on it but you have to declare under exempt income in the income tax operator so that have Mutual Funds are tax catch you again in another article.

Final Words:

I hope this article for mutual funds taxation and process of mutual fund taxes helped you in mutual funds taxation process so you can invest your money in mutual funds with better mutual funds taxation. And if you like this article please comment your words and suggestions for this mutual funds taxation article and please check out my another article.

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