New Delhi By the way, in terms of investment, mutual fund is the best option today. But here too, your money will be taxed. Mutual funds offer better returns. The other good thing is that mutual funds can withdraw funds immediately when needed. But whenever you redeem your mutual fund, it is taxed. According to experts, there are two types of mutual fund schemes. The first of these is the equity oriented scheme, while all the other schemes fall into the second category. Keep in mind that if 65% of the money coming in a scheme is invested in the equity market, then it will be called an equity oriented scheme. Know before tax how many mutual fund schemes are there.
Different categories of mutual funds
As we mentioned above, mutual funds are of 2 categories. The first include equity funds and the second category includes all other types of funds. These include long-term debt, liquid, short-term debt and income funds, as well as government securities and fixed maturity plans. Apart from this, Gold ETFs, Gold Savings Funds and International Funds also belong to this category.
Know how tax is levied
Taxes are charged in mutual funds in two ways. It is divided into periods. These include short term and long term. First let’s talk about the short term. Short-term capital gains are also taxed in two ways. Of these, equity oriented scheme will attract 15% tax. All other funds will be taxed on the profits, which will be taxed according to your tax slab. For example, if you fall in the 15% tax slab, then profits will be taxed accordingly.
Know the rule of tax on long term
Mutual funds are taxed differently over the long term. Secondly, there is also a tax rebate. If you have invested in the equity oriented scheme, you will get a rebate on the long term capital gains tax of up to Rs 1 lakh. If it exceeds 10% tax will be levied. On the other hand, those filing the Securities Transaction Tax (STT) will also get a small tax exemption here.
Dividend will also be taxed
Dividends found in mutual funds are also taxed. However, earlier, there was no tax on dividend. But some rules were changed in the 2020 budget, under which investors get dividend, they are also taxed according to the income tax slab.
Tax is saved in these schemes
Mutual funds have an option in which tax is saved, as well as strong returns. This is the Equity-Link Savings Scheme (ELSS). ELSS is a scheme of mutual funds only. The returns of these schemes are much higher than other tax-saving schemes. ELSS is a great option in which you can save tax.
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