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Chapter 8: Mutual Fund Taxation

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Taxation is a critical aspect of mutual fund investments that significantly impacts an investor's returns. This chapter provides a comprehensive overview of the tax implications for mutual fund investments in India, covering various scenarios such as capital gains, dividend income, stamp duty, and tax benefits. Understanding these taxation nuances is essential for mutual fund distributors to provide accurate guidance and help investors make informed investment decisions.

Chapter Summary

  • Mutual fund schemes have specific tax treatments that vary based on income type, holding period, and fund category.
  • Capital gains taxation differs for equity and non-equity oriented funds, with different holding periods and tax rates.
  • Dividend income is now taxed in the hands of investors at their applicable income tax slab rate.
  • Stamp duty is applicable on mutual fund unit transactions at different rates.
  • Specific rules exist for setting off capital gains and losses across different income categories.
  • Securities Transaction Tax (STT) applies to certain equity-oriented mutual fund transactions.
  • Equity Linked Savings Schemes (ELSS) offer tax benefits under Section 80C with a mandatory lock-in period.
  • TDS and GST have specific implications for mutual fund investments and services.
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