Mutual Funds: How Much Tax Do You Have To Pay On Mutual Funds?
Mutual Funds News: Mutual funds are regarded as a good long-term investment tool. The tax implications apply to the earnings from investments made in mutual funds. This is regarded as income under the Income Tax Act, which requires the payment of capital gains tax. The type of fund and the length of time you have held it will determine how much tax is owed.
Tax on Mutual Funds
Equity oriented mutual funds are defined by the Income Tax Act as mutual fund schemes that allocate at least 65% of their assets to equity shares of Indian listed companies. Money withdrawn from an equity mutual fund is subject to taxes in the same way as shares of equity. Long-term investing is defined as any equity mutual fund investment lasting longer than a year. If you withdraw money after investing for more than a year, you will be subject to long-term capital gains tax. Profits up to Rs 1 lakh in a fiscal year are exempt from taxation. Any profit over this will be subject to a 10% tax. Should the investment be withdrew within a year, the gain will be classified as a short-term capital gain. A 15 percent short-term capital gains tax will be applied to this.
