Taxation on daily dividends debt fund
This query is : Resolved
28 January 2020
Dear sir,
Can you please confirm whether following fund dividend is taxable or not? Dividend is reinvested in units daily.
LIC MF Banking & PSU Debt - Direct Plan - Dividend - Daily
Thanks
Rajesh Jadhav
Can you please confirm whether following fund dividend is taxable or not? Dividend is reinvested in units daily.
LIC MF Banking & PSU Debt - Direct Plan - Dividend - Daily
Thanks
Rajesh Jadhav
26 May 2020
In case of debt funds or non-equity funds, if you sell your investments after less than three years of holding, gains or returns are treated as short-term capital gains for taxation purpose. Short-term capital gains are added to your income and taxed according to your applicable income tax slab.
If the holding period of debt fund investments is more than three years, returns are considered as long-term capital gains for taxation purpose and taxed at 20% with indexation benefit. Indexation means adjustment of gains after taking inflation into consideration. So if you have invested in a debt fund for over three years, you will be paying taxes only on the returns over and above the inflation-adjusted initial investment.
Dividends from debt mutual funds are tax-free in the hands of the investor but dividend payouts from debt mutual funds are subjected to a dividend distribution tax of 29.12% (including cess and surcharge). This effectively reduces the in-hand return for investors.
If the holding period of debt fund investments is more than three years, returns are considered as long-term capital gains for taxation purpose and taxed at 20% with indexation benefit. Indexation means adjustment of gains after taking inflation into consideration. So if you have invested in a debt fund for over three years, you will be paying taxes only on the returns over and above the inflation-adjusted initial investment.
Dividends from debt mutual funds are tax-free in the hands of the investor but dividend payouts from debt mutual funds are subjected to a dividend distribution tax of 29.12% (including cess and surcharge). This effectively reduces the in-hand return for investors.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Off Market debit and credit transaction
- Showing Gift from relative in ITR for this year
- ITR selection for salaries and capital gain less than L
- Share accounting-->fifo - capital gain - period as per fifo?
- Short Term Capital gain on shares bought and sold after 2018 onwards
- Soyabean hsn code and gst rate
- Treatment of Pension ?annuity returns on PMVY
- ITR filing- non tax audit cases- Asstt.Year 2026-2027
- GSTR-4 Annual Return ! Pending Returns for F.Y. 20-21 to 22-23
- GST Taxability
- TDS on payment to CHA as per new section
- Sale of Forign Shares
- INCOME TAX ON REDEVELOPEMENT OF FLAT
- Form 10E u/s 89(1). Need clarification because experts opinions differ !!!!
- Gst invoice numbering and delivery challan numbering
- Standard Deduction claim for EPFO Pension and ICICI Prudential Life Annuity
- Small dealers gst returns filing
- Sales amount in Gstr1
- CG after sale of flat
- E Commerce GSTR1 & 3B how to file
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
