There are many types of mutual funds. Each fund has its own tax benefits. Therefore, Savepro, a financial advisor suggests that mutual fund investments should be made wisely. For example, investors can earn 8% to 9% interest rate through a fixed deposit scheme; however, these types of schemes are taxable. Therefore, post-tax return; investors will get 5% to 6% returns only. However, with the rising inflation rates, the returns might substantially decrease. But, mutual funds are much more tax-friendly. The tax on mutual funds arises only on the sale of the funds.
For example, portfolios with 65% equity funds but are sold before 1 year charged 15% plus 4% cess rate. On the other hand, long-term equity funds (funds that are kept for a year) are charged a 10% tax and 4 % cess. But, long-term equity funds are only taxed if the gains exceed more than 1 lakh. Therefore, Savepro suggests you should keep funds for the long-term and thereafter, sell them to maximize your profits. Similarly, tax on long-term debt mutual funds depends upon the applicable tax rate for the investor. Short-term debt mutual funds have a holding period of 3 years. On the other hand, long term debt funds have a period of more than 3 years. Therefore, you could have a 30% tax and 4 % cess on short-term debt funds but long-term funds are charged 20% tax and have 4% cess. So, Savepro suggests you to attain knowledge about your debt funds and buy long-term funds to decrease your overall tax and cess. Lastly, the fund house pays dividends distribution tax (DDT) before distributing it to the investors. Therefore, dividends are tax-free for investors. So, Savepro suggests investing in dividends to save as much as 29.120% tax paid by the fund house. So, investors should learn about these benefits before making any investment decisions. To read more Follow Us on ISSUU
1 Comment
Pawan Kumar
2/26/2020 10:29:45 pm
Great piece of contant.Keep it up.
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