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Taxability of Amount from Mutual Fund

Arjit Singhal (Ca Final (New) Article Assistant Student ) (107 Points)

13 May 2010

HIi Friends

Can anyone tell me what be taxability position of following

1. Excess Amount (i.e. more than the amount which was invested) received from Mutual fund

a. On maturity

b. on redemption

Plz reply with section

Thanks for ur attention.

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6 Replies

CA. RUPESH JOSHI (Chartered Accountant) (174 Points)
Replied 14 May 2010

Will be taxable as short term / long term capital gains depending on the period of holding as no STT is paid. Had you sold it and paid STT then they would have been exempt u/s. 10(38).

Note : 10(38) is applicable only to units of equity oriented fund. In case of other mutual funds it would remain taxable

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CA Saurabh Shukla (Accounts Executive) (223 Points)
Replied 14 May 2010

		Tax Rates* under the Act			TDS Rate* under the Act
		Residents	NRIs / PIOs	FIIs	Residents	NRIs / PIOs / other Non FII non-residents	FIIs
Short Term Capital Gain	Units of a non equity oriented fund	Taxable at normal rates of tax applicable to the assessee		30% without indexation benefit (u/s 115AD)	NIL	30% for non residents non corporate, 40% for non resident corporate, (u/s 195)	NIL
Short Term Capital Gain	units of an equity oriented fund	10% on redemption of units where STT is payable on redemption (u/s 111A)					Nil
Long Term Capital Gain **	units of a non equity oriented fund	10% without indexation, or 20% with indexation, whichever is lower (u/s 112)		10% with no indexation benefit (u/s 115AD)	NIL	20% for non residents (u/s 195)	NIL
Long Term Capital Gain **	units of an equity oriented fund	Exempt in case of redemption of units where STT is payable on redemption [u/s 10(38) ]				Nil	Nil

*Plus surcharge as applicable: corporate, co-operative societies, firms and local authorities: 10% ; Individuals/HUFs/BOIs/AOPs, with total income exceeding Rs.10,00,000 : 10%; Artificial juridical person: 10%.
** Capital Gains on redemption of units held for a period of more than 12 months from the date of allotment.
*** As per section 111A of the Act, effective from 1/10/2004 short-term capital gains on equity oriented fund is chargeable to tax at a Lower rate of 10 percent.
•Long Term Capital Gains arising from redemption of unit of a non equity oriented fund are exempt from tax, if gains are invested
in specified bonds within 6 months from the date of redemption, under Section 54EC of the Act

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kaushal siroya (article) (30 Points)
Replied 13 October 2010

Sir please told me that section 10(38) is applicable only to equity oriented fund or both (i.e equity oriented fund mutual fund).If it is applicable only to equity oriented fund then on transfer on unit of mutual fund capital gain are arise & if it applicable to both then no capital gain are arise on transfer on unit of mutual fund.

Mandar (Senior Acountant) (47 Points)
Replied 15 June 2011

Can any1 plz tel me what is taxabilty in case of mutual fund which is counted as units and we also took ded'n U/S 80-C, eg. i am investing Rs.10000/- per month in Max New York Life Insurance and for tht i am getting accumlated Units for each premium. So on maturity what abt taxabiltiy 1)if i shown in Assets 2) if i debited to cap a/c every year. And tell me whether it is fully exepmt from tax?????? plz rly soon.........