Mutual Fund Taxability

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CA Abhishek Jain (Querist)
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21 April 2008 Can some one guide me about taxability of income arising from disposal of units of mutual fund and dividend from mutual fund?

Abhinav Khemani

Abhinav Khemani (Expert)
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21 April 2008 Dear Abhishek,

Follwoing will be the tax treatment for capital gain and dividend income on mutual fund investments:

Dividend Income:

Exempt in the hands of investors for both equity and debt schemes. However, AMC is liable to pay DDT in case debt schemes.

CAPITAL GAIN TAX FOR EQUITY SCHEMES:
LTCG - Exempt subject to payment of STT
STCG - Taxed at 15% plus cess/surcharge subject yo payment of STT.

CAPITAL GAIN TAX FOR DEBT SCHEMES:
LTCG - Taxed @ 20% (with Indexation) or 10% (without Indexation) – Plus applicable surcharge and Cess.
STCG - Taxed at the normal rate of tax as applicable to the assessee.

Abhinav.

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CA Abhishek Jain

CA Abhishek Jain (Querist)
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01 May 2008 Thanks Abhinav,

Actually I also want the clarification on taxability of Principal amount on Mutual Fund at the time of withdrawal.

Abhishek

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Abhinav Khemani

Abhinav Khemani (Expert)
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07 May 2008 Dear Abhishek,

there is no taxability of the principal amount. Principal amount is the base to arrive at the profits or losses on your investments.

No taxing on principal amount at all.

Abhinav.

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