What is the short-term/long-term capital gain taxes in mutual fund investing in India?
Taxes in a mutual fund are based on the type of fund in which you invested and the holding period. Here’s a quick snapshot of the taxes in different funds.
I hope it helps. Cheers!!
I have attach a snapshot of Mutual Fund Taxation. You can also refer https://rupeevest.com/Mutual-Funds/Tax
Mutual Fund ELSS schemes: Best way to Save Tax and Create Wealth
Mutual fund Equity Linked Savings Schemes are among the best investment options for tax savings under Section 80C of Income Tax Act. These schemes enjoy triple tax benefits.
Investments in Equity Linked Savings Schemes are exempt from taxes under Section 80C of Income Tax Act 1961. By investing up to Rs 150,000 (maximum allowable investment under Section 80C), investors can save up to Rs 46,350 in taxes.
Best Tax-Saving Equity Funds 2018-2019.
- Aditya Birla Sun Life Tax Relief 96.
- L & T tax advantage Fund.
The capital gain/loss amount of a mutual fund is calculated by deducting the investment amount from the redemption/sale value. So if an investor puts in Rs. 10,000/- in a mutual fund and then redeems/sells it for Rs. 12,000/-, the capital gain of that investor would be Rs. 2,000/-. If the same mutual fund is instead redeemed/sold by the investor for Rs. 9,000/-, then the capital loss of that investor would be Rs. 1,000/-.
In equity and hybrid fund types, the Short-term capital gain is where the investment is held for less than 12 months. Long term capital gain is generated where the investment is held for more than 12 months.
For debt funds, the STCG has a holding period of less than 36 months and LTCG has a holding period of more than 36 months.
If you want to save tax, HDFC Mutual Fund tax saving instruments can be very helpful. HDFC’s products are very helpful. I personally have invested in it and got good returns. Also, I’d suggest that you invest in direct plans. They have lesser expense ratio and thus give more returns.
Here’s an animated video to learn mutual fund taxation easier: