Mutual Funds – Taxation Aspects
In this post, I will explain the Taxation aspects of Income / Returns from Mutual Funds.
The taxation depends on type of Mutual fund scheme you have invested in. The taxation will be different for equity schemes, and non equity schemes ( for e.g debt schemes, money market etc)
Broadly, there can be following 2 type of Income from Mutual Funds:
Dividend
Capital Gains
A. Dividend Received - Tax Free in hands of investor
Any dividend received from Mutual Funds is exempt from Tax in hands of investor. So , if you have selected Dividend Option while investing in MF, then any dividend received is tax free for you.
Actually, the interest on such dividend is already paid by Mutual fund company via Dividend Distribution Tax (DDT) . Paying such tax impact returns of your MF scheme.
DD...