12,133.3026.4
Stock Analysis, IPO, Mutual Funds, Bonds & More

How returns from debt mutual funds are taxed

Gains on debt mutual funds held for less than 36 months are treated as short-term capital gains and taxed as per the income tax slab of the investor.

ET CONTRIBUTORS|
Updated: Oct 29, 2018, 10.02 AM IST
0Comments
BCCL
tax63
Dividends from debt mutual funds are tax free in the hands of investors but they are liable for a dividend distribution tax of 29.12 percent.
1. Mutual funds that invest less than 65% of their corpus in equity and equity related securities at all times are treated as debt mutual funds for taxation.

2. Gains on debt mutual funds held for less than 36 months are treated as short term capital gains and taxed as per the income tax slab of the investor.

3. Gains on debt mutual funds held for 36 months or more are treated as long-term capital gains and taxed at the rate of 20% after indexation.

4. Dividends from debt mutual funds are taxfree in the hands of investors but they are liable for a dividend distribution tax of 25% (29.12% with surcharge and cess).

5. For income tax purposes, international funds and fund of funds are considered as debt funds and taxed accordingly

(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

Also Read

How to construct a debt mutual fund portfolio

Best debt mutual fund strategy for investors in 2020

How will an NRI debt mutual fund investor be taxed?

Are debt mutual funds losing credibility?

Will Sebi tweaks help debt mutual funds to reverse fortunes in 2020?

Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service