Finally, the budget is out and let us now discuss on what is Mutual Fund Taxation and what are the tax rates for FY 2016-17 of AY 2017-18.
First let us understand of what are the factors that determine the Mutual Fund Taxation. The three major part of this are as below.
- Resident or Non-Resident (NRI)-Your tax will be based on your residential status. If you are resident then the taxation rules will be different and if NRI then it differs. Hence, first you have to make sure of what is your residential status.
- Equity Funds or Non-Equity Funds-Any fund which invests 65% or more in equity is called as Equity Fund. For example large cap funds, multi-cap funds, small and mid-cap funds or equity-oriented balanced funds (where the equity exposure is 65% or more) are all called equity oriented funds. If the equity portion is less than that, then they are all treated as debt funds or non-equity funds. For example liquid funds, ultra-short term funds, short-term funds, income funds, gilt funds, debt-oriented balanced funds, gold funds, fund of funds or money market funds.
- Holding periods of Investment– Holding period for Equity and Debt Funds will be different for taxation purpose. For equity funds holding period more than a year is called long term. If holding period is less than a year then such equity mutual funds holding period is considered as short term. Whereas in case of debt funds, holding period more than 3 years is considered as long term. If holding period of debt funds is less than 3 years, then it is considered as short-term and taxed.
I tried to explain the same in below image.
Now, let us move forward and see how STCG (Short Term Capital Gain) and LTCG (Long Term Capital Gain) are taxed in India for Mutual Fund for FY 2017-17.
There will be TDS applicable only to NRIs. Below are the TDS rate for NRIs for FY 2016-17.
Along with regular STCG and LTCG, one has to pay STT (Security Transaction Tax). This will be as per below for FY 2016-17.
The changes to this is marked in red. Rest of STT are same as they are for previous year. This change was done in Budget 2016.
Hope above information, is enough to understand how the Mutual Fund Taxation works in India for FY 2016-17.
Thanks Basu for this insightful article.
I received a capital gain statement when I sold my equity MF after holding for more than 5 years or so. It shows LTCG with indexing as well as without indexing. Now I understand that LTCG from equity mutual fund is tax exempt. But slightly confused as to which amount should I show in Exempt Income section while filing ITR (the one in LTCG with indexing column or the one in without indexing)?
Thanks
Vaibhav-Without indexing. You must show this in exempt income field.
Thanks Basu. Yes am gonna show that in the exempt field.
Sir, i sold one of my MF with icici prudential. They tell me that 1% tds will be deducted from the total value. why do they deduct 1%?? they said there is a notification in 2015 regarding the same. They did say they will give me the tds certificate but still im not sure about them. Kindly clarify regarding the same. Thanks
Rahul-I think the product you invested is not MF but Life Insurance Product. Check properly at first. There is no concept of TDS in MF.
dear sir,
many thanks for your valuable suggestions. i have 2 quires.
a)i made a partial withdrawal in a Mutual Fund (equity) within 1 year in FY 2016-2017. is it taxable?
b) is LPG refund taxable in FY 2016-2017?
Thanking you and looking for your early reply.
Kaushiki-a) YES as per above rule.
b) NO.
dear sir,
many thanks for your early reply and wish you a very happy and prosperous new year.
thanks
Kaushiki-Pleasure and same to you too.
Hi Basu,
I had started my two SIP at Nov 2014, and due to some urgent need i had to withdraw the money till DEC 2016,
which is two year from start date.
Is a single SIP amount monthly should be completed one year to avail the tax benefit , Please provide your input.
Thanks,
Shalabh
If I am not under tax bracket,Then the STCG made from debt/bond funds is taxable?
Nikhil-If your total income including STCG is not beyond Rs.2,50,000, then your tax liability is zero.
Hi Basavaraj
What would be the capital gains in case of fund-of-funds like Franklin India Feeder – Franklin US Opportunities Fund? I presume fund-of-funds are treated differently. Please educate us on the taxation for both Short term and Long term capital gains of such funds.
Regards,
Antartica
Antartica-Fund Of Funds are treated as debt funds for taxation purpose.
Dear Sir,
I am an NRI. I want to invest some money in debt fund for long term (more than 3 years). I have the following questions.
1) Is it beneficial to keep the money in debt fund than FD.
2) How 20% indexation is calculated.
3) Whether tax deducted can be redeem if my total income is less than Rs300000.
4) Liquid funds are also under the category of debt funds.
Vinay-1) Yes, in your case.
2) Search in Google. You find enough examples. Because I can’t explain the whole calculation in commenting.
3) There will not be TDS in mutual funds.
4) YES.
dear sir i believe that there would be TDS at higher rate ,if he is investing IN MUTUAL FUND as NRI ,whatever be tax slab.you have to file return to get refund if any
warm regards
Yashpal-For NRIs the TDS is there. No doubt in that. Even for other products too. Sorry I not read is residential status.
Dear Basavaraj,
I am an NRI and had invested in SUNDARAM CAPITAL PROTECTION ORIENTED FUND 5YRS SR4 GROWTH which is matured as on 8th Dec. I noted that they have deducted CGT at source. Please advise if I can claim back based on foregoing.
In the illustration above you have stated that TDS is applicable to NRIs and provided the rates. However in your answer 3 to Vinay’s queries you have stated that “There will not be TDS in mutual funds” Please clarify
Hareesh-You can file your IT return and if there is no tax liability then you can get back the CGT what MF deducted. I replied to Vinay in mindset that he is resident Indian. But TDS applies to NRIs.
Dear Basavaraj-Thanks for instant response with clarifications. Since no other resident income to declare, I am not filing the tax returns for quite sometime now. In such cases can I request AMC to refund the tax?
Hareesh-They will not refund. Refund will be from IT Dept ONLY. Hence, by showing this income, you have to file IT return. Based on the tax dues, if the TDS is more then IT Dept will refund it.
dear sir ,i have purchased five bhavisya nirman bond,floated by NABAD in 2009.in their prospects it was shown as it is zero coupon bond and indexation would allowed for tax beneifit .is this right.but in tax form itr it is shown as zero coupon bond with 10% tax.what is right.if this is right can gain can be adjusted with long term loss of debt mutual fund.bonds are maturing in march 2019
Yashpal-It is 10% with indexation benefit for LTCG. Do you have long-term capital loss from debt mutual funds?
sir i have LTCG loss in debt mutual fund,but idon,t see B3 column ITR-2 i.e cost of acquisition with indexation .THERE IT IS WRITTEN as without indexation
warm regard
Yashpal-Refer the changed LTCG rules for Debt Funds. Now the LTCG taxation is with indexation at 20%.
sir you mean to say that zero coupon bond floated by NABAD are like debt mutual fund for taxation purpose and their LTCG can adjusted with LONG TERM LOSS of debt mutual fund
warm regards
Yashpal-YES.
sir thanks for your reply,but why 10% without indexation coulmn is provided in ITR2 ,in case of zero coupon bond if it is not applicable now.
warm regards
Yashpal-That was old update.
dear sir, in FY 2015-2016 i made a profit of rs. 5000 by selling a debt fund after 4 years and the fund house has deducted rs. 500. is it O.K?
Kaushiki-Why the AMC deducted Rs.500??
dear sir, they said it was a LTCG & as per present rule they deducted the amt.
Kaushiki-But there is no such law to deduct TDS from MF funds. Are you an NRI?
dear sir, i am not a NRI. but my question is how LTCG is calculated at the time of redemption of a debt MF? in the ready tax reckoner of a MF house it is mentioned that LTCG is 20% with indexation + 15% Surcharge+ 3% Cess= 23.690% on listed securities.
does it means that TDS would be deducted @ 23.69% at the time of redemption?
pl. clarify the matter clearly
Kaushiki-Forget about rate, if you are not an NRI, then there is NO TDS. First ask that to them.
dear sir, many thanks for your early reply. now i have a question to you. if i want to invest a lump sum amt. of money at present for 2 yrs. then what would be the best option and why – BANK FD OR A DEBT FUND? if it is a debt fund then suggest one or two.
have a nice day and enjoy yourself.
Kaushiki-Refer my old post “10 best short term investment options in India“.
dear sir, as i was a professional teacher once upon a time i am very much impressed with your analysis & simple explanation.
now i am requesting you to clear the concepts of NCD, CORPORATE BOND FUND, FMP, etc. in details as these are not clear to me. what are the differences among them?
recently i have invested in SREI INFRA NCD 2016 & INDIA HOUSING FIN. LTD. NCD 2016. am i correct? can i sell it at the time of listing?
Kaushiki-Let me write on all those products separately. Regarding your NCD, refer the product feature closely.
SIR I INVESTED IN MF AS PER DETAIL BELOW
NOV 14 = 200000 WITH NAV 35.48
SIP OF 5000 FROM DEC 14 TO SEP 15 = 50000 ( WITH DIFF NAVS )
REDEMPTION FULL WITH NAV 35.50 AMOUNTING TO 246170 ( LOSS OF 3830)
IS THERE ANY TAX LABILITY
Rajinder-Without knowing which type of fund it is, how can I guide you?
SIR, IT IS BSL PURE VALUE GROWTH REGULAR FUND
SIR I REDEEMED ON OCT 2015
Rajinder-I am asking you types of funds.
Rajinder-Units which completed 1 yer are considered for LTCG and more than that are STCG. If you booked losses, then the rules will be “Short Term Capital Loss (both from equity and debt) can be set off against Short-Term Capital Gain (both equity and debt) and for long term capital gain (only debt)”.
If I am an NRI investing in open-ended Debt Mutual Funds, can I avail indexation benefits after 3 years. On most of the Mutual Fund websites, they have mentioned that for unlisted non-equity funds, the tax applicable is 10% without indexation. Are open-ended Mutual Funds listed funds or unlisted funds and will I be able to avail of indexation benefits?
Kshitij-Listed funds means closed-ended funds which can be traded in market. I think you are confusing.
Hi Basu
Can you please write an article on calculation of Short term Capital Gain and Long Term Captial Gain (with Indexation benefit) on selling of Debt Mutual Fund?
Thanks
Mohit-Surely, let me give me some time. I will write a detailed post on this. Thanks for the suggestion.
I have invested 100000 HDFC long term gilt fund option yearly dividend , will i get tax free dividend every year , will it give me better post tax return as compare to Growth option.
Subrata-Yes, dividend is tax free for you. It is wrong to compare dividend to growth option of your fund. Because both are meant for different usage.
Hi Basavaraj,
Is it allowed by law to invest in my wife’s portfolio(long term Equity/Debt investments)? If Yes, Is it treated like a Gift?
What would happen to ownership of returns (Invested amounts + any gains). e.g. I invested 1 Lac in my wife’s portfolio and after 1 year she gets 1.2 Lac credited in her account. After 1 year if she invests this money in Bank FD and gets 10k as interest on that. Do I still need to pay taxes on whatever interest she gets or not?
In simple terms, I would like to know… How can I transfer ownership of my savings on to my wife’s name, without paying any taxes for her gains. I just want to gift the money and let her pay the taxes.
Gaurav-If you gift money to your wife, then it is tax-free for her. However, any income she generates from that amount is taxable income for YOU. Let us say you gifted her Rs.1,00,000. After a year from this investment she generated Rs.1,10,000. So this Rs.10,000 is taxable income for you. However, any income she generates from Rs.10,000 is her income.
Instead, I suggest you to give her as a long. In that case, income will be included in her name.
Hi Basavaraj
Is this income/gain attracts tax even if my wife gets a dividend from an equity based MF?
Sorry, I was not able to understand your suggestion “Instead, I suggest you to give her as a long. In that case, income will be included in her name.” Do you mean loan instead of long? Do I need to furnish any legal papers for the same.
Thanks.
Gaurav-Dividend income is tax free in the hand of investors. So it will not be taxed. There is typo error I think, read like “Instead, I suggest you to give her as a loan. In that case, income will be included in her name”.
very lucid and well explained. congratulations!
Vandita-Pleasure 🙂
hi I am a senior citizen and getting hit due to reduction of interest rates on SCSS and looking at investing in debt oriented MIS with SWP. 1. if I buy from scheme already in operation my yield will be low as NAV will be higher so I will have to wait for a new issue. am I correct? 2. IDFC bank offers 8.75% for seniors. I wish to invest in term deposit there. 3. how does one come to know about new issues of MIS and which fund house to choose from. thankful for your advise.
Subbarao-Let me reply to this in Blog Forum. Because you already questioned there.
Hi,
Need suggestion for investment for short term ( 1 year ).
Liquid / Ultra short / Arbitrage Fund / Debt ???
in 20% bracket ( taxation ).
Dear Sir,
I have done following trasaction in last financial year
IDFC Arbitrage Fund-Dividend-(Direct Plan) – Short term Capital loss – X
ICICI Prudential Flexible Income – Direct Plan – Growth – Short term Capital gain Y
The 1st one will be considered as Equity fund & the second one will be Debt fund.
I am in 20% tax bracket. How should I calculate short term capital gain tax ?
Thanks,
-Santosh
Let me give the exact amount
IDFC Arbitrage Fund-Dividend-(Direct Plan) – Short term Capital loss -> 1723
ICICI Prudential Flexible Income – Direct Plan – Growth – Short term Capital gain -> 31099
So how much tax I have to pay?
Regards,
-Santosh
Santosh-Short Term Capital Loss (from equity) can be set off against Long Term Capital Gain (ONLY from Debt). This rule satisfy in your condition. Hence, you can set off the loss. You have to set off and then calculate the capital gain.
I think Both are short term capital gain/ loss.
Because I sold the both funds within one year of purchase.
So what will be the calculation ?
Regards,
-Santosh
Dear Sir,
Can you please clear this doubt ?
Regards,
-Santosh
Santosh-Short Term Capital Loss (both from equity and debt) can be set off against Short-Term Capital Gain (both equity and debt) and for long term capital gain (only debt). Now it is cleared?
Thanks a lot sir.
It is clear now.
My Tax will be (31099 – 1723) * 20%.
Thanks,
-Santosh
Santosh-Finally 🙂
Dear Sir,
Please help me to know the tax implication for AY 2016-17 in the following transactions:
1. SBI TAX ADVANTAGE FUND SERIES I DIVIDEND purchased on 04.01.2008 at face value of Rs. 15000, redeemed on 16.07.2015 resulting Capital Gain of Rs. 20,551/-. What be the tax liability?
2.Franklin India High Growth Companies Fund – GROWTH a monthly SIP investment of Rs. 500/- for 36 months i.e total investment Rs. 18000/- (From May 2009 to April 2012) and redeemed on 06.04.2015 resulting Capital Gain Rs. 28,702/-.What be the tax liability?
3. L&T Equity shares (more than 365 days) buying price Rs. 10,181/- and sale on 21.07.2015 at Rs. 15821/- resulting Capital Gain Rs. 5,640/-.What be the tax liability?
It is further requested to advise whether the above transaction are to be shown in ITR Form during submission of tax return. Regret inconvenience.
Regards.
Shyam Mondal
Shyam-1) It is LTCG of difference between buying price (with indexation) and profit then is taxed @20%.
2) Units which are older than a year are tax free. However, units less than a year comes under STCG. The profit from such units selling will be taxed as per your tax slab.
3) It is one time investment and holding period is more than a year, then it is tax free.
Yes, accordingly you have to show them in ITR.
Hi Basvaraj,
I got an idea but how it will be calculated that i dont know .
lets say i have purchased shares of 10000 in june 2016 and i sell in july 2016 for 15000 INR so how my capital gain tax will be calculated.
Bhavesh-Let us say you purchased 100 stocks at Rs.10 on June 2016. So the buy value is Rs.1,000. Let us say you sell it in July, 2016 at price of Rs.20 each. So total sell value will be Rs.2,000. The profit in this is Rs.1,000. This Rs.1,000 is taxed as short term capital gain.
I want to invest money in mutual funds for college education of my grandson who is now 9 years old.Please suggest few good mutual funds and and also min and max time horizon.
Venkatesan-They are listed in my earlier post “Top 10 Best SIP Mutual Funds to invest in India in 2016“.
Dear Sir,
Please help me to know the tax implication for AY 2016-17 in the following transactions:
1. SBI TAX ADVANTAGE FUND SERIES I DIVIDEND purchased on 04.01.2008 at face value of Rs. 15000, redeemed on 16.07.2015 resulting Capital Gain of Rs. 20,551/-.
2.Franklin India High Growth Companies Fund – GROWTH a monthly SIP investment of Rs. 500/- for 36 months i.e total investment Rs. 18000/- (From May 2009 to April 2012) and redeemed on 06.04.2015 resulting Capital Gain Rs. 28,702/-.
3. L&T Equity shares (more than 365 days) buying price Rs. 10,181/- and sale on 21.07.2015 at Rs. 15821/- resulting Capital Gain Rs. 5,640/-.
It is further requested to advise whether the above transaction are to be shown in ITR Form during submission of tax return. Regret inconvenience.
Regards.
Shyam Mondal
Shyam-1) It is equity fund. Hence, gain is tax free.
2) All units withdrawan after a year of completion (Last SIP was in April 2012 but redeemed on April, 2015). Hence, capital gain is tax free.
3) If all units completed a year, then the gain is tax free.
Yes, you can show them under exempt income list.
Dear Sir,
I understand that Debt mutual fund short term capitacal gain tax is as per individual tax slab, and NRI will get 30% TDS. If I do not have any other taxable income in India, can I claim this 30% TDS back, by filing Income Tax Return?
Thanks in advance.
Rohit
Rohit-Yes, why not?
Hello Basu,
I am planning to start the SIP from your suggested mutual fund list and Franklin funds interest me more , I would like to know if I will be forced to sell/redeem my units If I move to US after 2 years or so ? As I see Franklin and many fund houses restrict US/Canada residents to invest here .
What will happen to existing funds which was bought before moving ?
Whether any other fund houses opts to continue investments even after moving to US ? Could you please advice
Sai-It may happen. Hence, invest in AMCs funds which allow USA NRIs to invest.
Thanks Basu,
Could you please suggest some funds ? The only fund house which my relative told was L&T . Any other alternate choices ? I see there are no crisp results on net. Pls advice
Sai-Refer my earlier post “Top 10 Best SIP Mutual Funds to invest in India in 2016“.
Dear Sir,
I am not able to post question in your forum. I have registered in your forum.
So posting a query here. Can you write a blog on best debt funds to invest in different investment time horizon. I usually put my excess money from monthly salary into Debt funds. I have monthly SIP in 5-6 Equity funds ( around 30K). Whenever market goes down say 500 -1000 points, I put additional money from debt ( short term debt fund) to the above equity funds. Whether this strategy works good for long term ( > 10yrs) for better returns.
Regards,
-Santosh
Santosh-Now you can post the comment. I have to approve the user. I just approved it.
Thanks,
Can you please reply the query as well.
Thanks,
-Santosh
Santosh-How you identify that MARKET IS DOWN?
Dear Sir,
I track sensex, Nifty, midcap, smallcap index. If a mutual fund is following Nifty 50 ( say ICICI Prudential Focused Bluechip) , when Nifty 50 fails 2-5% in a day ( say yesterday’s market fall), I shall trigger a buy proportionately. I keep some buffer balance in SBI Maxgain account for this purpose. Same time I sell some debt funds ( short term or liquid) to maintain the balance.
I know know this is not full-proof, but most of the time it works and you get MF units at less NAV value.
Regards,
-Santosh
Santosh-I am not saying it as wrong. But check the end result of default SIP Vs your strategy. I feel the result is not much different.
Yes.
Do we have any analysis ( link) somewhere for last 5-10yrs analysis on this aspect.
Regards,
Santosh
Santosh-Sadly NONE. But after few years, you can compare the one like what if you done regular SIP to manual SIP on your own. Not a big deal.
Thanks Sir,
Coming to my original question, can you write about best debt funds with different time horizons ?
I have another question. Which date in a month is best for Equity mutual fund SIP investment ? Is there a study or analysis on this by someone ?
Regards,
-Santosh
Santosh-Sure, let me explore on that too. There is no such difference or we can say that this particular day of month is best for investment.
Dear Sir,
The long term tax on debt funds with indexation is little complex to follow. Can you please explain it with an example. i.e how normal tax is calculated , how tax is computed with indexation .
Investor should always compute tax with indexation if they keep investing on debt funds more than 3 yrs ?
Regards,
-Santosh
Santosh-Sure, I will write a different post on that. I know it involves calculation which confuses many.
sir
i have to invest Rs 35000/- per month kindly suggest good return mutual fund. i am Tax payer in 30% slab.
income of mutual fund will be under 30% slab or not
Rajendra-What do you mean by GOOD RETURN? Without knowing your goals, your risk appetite, and your past investments, it is hard for me to guide.
Hello,
For SIP investment for NRI’s,
LTCG (Long Term Capital Gain) is Nil (not tax at all)?
Eg:
Say, Invested Rs.10000 every month for next 10 yrs ==> Total= Rs.10000 * 120 months = Rs.12,00,000
After 15 yrs, the value of the SIP is =Rs. 20,00,000
We donot have to pay any tax for this SIP if we draw funds after 15 yrs?
Appreciate ur comments…thx.
Dan-Yes, it is NIL.
Hello Basu sir,
i am right now confused how to invest for my future. I have LIC Plan (premium- 40k /per annum in two plans) and no more investments . Now i want to invest money in SIPs. And i consulted an adviser ,who is suggesting me to invest me in UTI – Transportation and Logistics Fund (2000/month) and Sundaram mf.
My investment plan is to invest 4000/month at a start for a time horizon of 15 years .
Can u help me to create my portfolio.
Arun-You can chose one large cap and one small and mid cap fund for equity and for debt, you can use PPF. Refer my post for selection of mutual funds at “Top 10 Best SIP Mutual Funds to invest in India in 2016“.
Dear Sir,
In debt mutual fund joint investment is done by 2 relatives.
Payment for investment is done from the joint bank account of the 2 relatives.
Which joint holder will have to pay the income tax while selling the debt mutual funds?
Whether the income tax liability will have to be shared equally by the 2 joint holders or whether the first holder of the
mutual fund will have to pay the entire income tax?
Biji-when you invest in MF, then even though it is joint holding, it is called first account holder and second account holder. Tax liability will be on first holder.
basu ji,
you are great dear..
your articles(all) are as simple as good..
plz keep it up..
thanks
Arun-Pleasure 🙂
Hi Basu,
I’ve a SIP for Rs. 4000 in HDFC Tax Saver Growth and planning to invest another 5000 under tax instrument from April ’16. My plan to keep for >5 years. My concern is
1. Whether the existing MF is good for long term investment
2. For new SIP which MF you shall prefer
3. At the time of redemption is it taxable
Jagan-Refer my earlier post “Top 5 Best ELSS or Tax Saving Mutual Funds to invest in 2016“.
Will there be Short term capital gain if we redeem “Ultra Short term debt funds in case of Growth Option” Or Liquid Funds?
If Yes, how much ?Do we need to declare in IT returns also?
Note: If we redeem will fund house automatically deduct capital gains and return money?
Manjunath-Yes, any debt fund redeemed within 3 years of it’s investment will be taxed as STCG (Short Term Capital Gain). The gain will be taxed as per your tax slab. Yes, you have to show the income in your IT return. No, fund houses will not deduct any tax (TDS), you have to show it in your IT return.
I want to invest 1000 per month in SIP, please suggest which one should I choose? additionally I want to save tax on it.
your suggestions please…
Prince-What is your timeframe?
Hi Basavaraj,
Hope you are doing good !
I am investing Rs 1000. per month in “Reliance growth fund” (SIP) since 2010. I redeemed Rs. 40000 in July 2015 . Shall I show this under “Income from other sources”while filling out my ITR ? Is this STCG or LTCG for me ? Also, how much would be tax percentage on it?
Nishant-This particular fund is equity fund. If all units of your SIPs completed one year, then the income is tax free. No need to mention it.
For a particular fund if its through SIP
Say after 1 year ,I sell it than does the tax apply as from 2 month onward through SIP the units purchased wouldn’t have completed 1 year
Sachin-It is like FIRST IN FIRST OUT (FIFO). The units which completed a year are eligible for long-term capital gain and less than a year are for short term capital gain tax.
I HAVE A QUERY, I WANT TO CHANGE/ WANTS TO GET SHIFT MY JURISDICTION OF INCOME TAX RETURN FROM YAMUNANAGAR IN HARYANA TO JAIPUR. AS NOW I AM RETIRED AND LIVING WITH MY SON INJAIPUR.I HAVE ALSO GOT MY NEW PAN CARD WITH JAIPUR ADDRESS.
WHAT IS THE PROCEDURE, WHICH FORM IS TO BE FILLED AND WHERE TO SUBMIT THE FORM/REQUEST FOR CHANGE OF JURISDICTION.
Sir,
If I purchase few units of a Mutual fund multiple times over the course of a year with different NAVs. Then upon selling them How would I compute Income tax.
Thanks.
Anil-It is First In First Out (FIFO) base.
Dear Basu,
Very crisp and precise article. You have nicely explained it too.
I am a regular reader now 🙂
Keep up the good work!
Regards,
Pradeep
Pradeep-Pleasure 🙂
Hi Basavaraj,
Investments under following mutual funds are eligible to take tax benefits under Section 80 CCD 1B (ie. Rs 50000/-) ?
1. Franklin India Pension Plan-Growth
2. UTI Retirement Benefit Pension Plan
3. Reliance Retirement Fund – Wealth Creation Scheme
Thanks.
Pramod-No, they not qualify for Sec.80CCD (1), but under Sec.80C as below.
While investing you will get the tax deduction under Sec 80 C of income tax limit. So a good option for higher tax bracket investors. While withdrawal-Both funds are treated as Debt Funds. So you need to pay STCG (Short Term Capital Gain), if withdrawal within a year. Or LTCG (Long Term Capital Gain) if withdrawal after one year from investments.
STCG-Taxed at normal tax rates based on your income tax slab. LTCG-20% with Indexation and 10% without Indexation, whichever is less.