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Tax Rules for Mutual Fund Investors*
as per Finance Bill 2009 – SNAPSHOT
 
EQUITY ORIENTED SCHEMES

 

Short Term
Capital Gains tax

Long Term
Capital gains Tax

Dividend Income

Dividend Distribution Tax

TDS

2008-09

2009-10

2008-09

2009-10

2008-09

2009-10

2008-09

2009-10

2008-09

2009-10

Resident
Individual / HUF

15%

15%

Nil

Nil

Tax Free

Tax Free

Nil

Nil

Nil

Nil

Resident Partnership
Firms / AOP / BOI

15%

15%

Nil

Nil

Tax Free

Tax Free

Nil

Nil

Nil

Nil

Domestic
Companies

15%

15%

Nil

Nil

Tax Free

Tax Free

Nil

Nil

Nil

Nil

NRIs

15%

15%

Nil

Nil

Tax Free

Tax Free

Nil

Nil

STCG- 15%^
LTCG- Nil^

STCG - 15%^
LTCG- Nil^

 
OTHER SCHEMES

 

Short Term
Capital Gains Tax

Long Term
Capital Gains Tax

Dividend Income

Dividend Distribution
Tax – Other than Liquid /
Money Market Schemes

Dividend Distribution
Tax – Liquid /
Money Market Schemes

TDS

2008-09

2009-10@

2008-09

2009-10@

2008-09

2009-10

2008-09

2009-10

2008-09

2009-10

2008-09

2009-10@

Resident
Individual / HUF

As per slab

As per slab

10% (20%with
Indexation)

10% (20%with
Indexation

Tax Free

Tax Free

14.163%
(12.50% plus10% education cess)

14.163%
(12.50% plus10% education cess)

28.325%
(25% plus 10% surcharge plus 3% education cess)

28.325%
(25% plus 10% surcharge plus 3% education cess)

Nil

Nil

Partnership
Firms / AOP / BOI

30%

30%

10% (20%with
Indexation)

10% (20%with
Indexation)

Tax Free

Tax Free

22.66% (20% plus 10%
surcharge plus 3%
education cess)

22.66% (20% plus 10%
surcharge plus 3%
education cess)

28.325%
(25% plus 10% surcharge plus 3% education cess)

28.325%
(25% plus 10% surcharge plus 3% education cess)

Nil

Nil

Domestic
Companies

30%

30%

10% (20%with
Indexation)

10% (20%with
Indexation)

Tax Free

Tax Free

22.66% (20% plus 10%
surcharge plus 3%
education cess)

22.66% (20% plus 10%
surcharge plus 3%
education cess)

28.325%
(25% plus 10% surcharge plus 3% education cess)

28.325%
(25% plus 10% surcharge plus 3% education cess)

Nil

Nil

NRIs

As per slab

As per slab

10% (20%with
Indexation)

10% (20%with
Indexation)

Tax Free

Tax Free

14.163%
(12.50% plus10% education cess)

14.163%
(12.50% plus10% education cess)

28.325%
(25% plus 10% surcharge plus 3% education cess)

28.325%
(25% plus 10% surcharge plus 3% education cess)

STCG - 30%^ LTCG - 20%^
(after providing for indexation)

STCG - 30%^ LTCG - 20%^
(after providing for indexation)

 

*Resident Individuals, HUF, BOI, AOP, Domestic companies and NRIs.
^ Plus applicable surcharge and secondary and higher education cess.
@Surcharge:The Finance (no.2) Bill of 2009 has abolished surcharge in case of Resident Individual, HUF, Partnership Firms, AOP and BOI on the amount of Income Tax. For other including corporate bodies, 10% surcharge on tax payable.
Secondary and Higher Education Cess: Secondary and Higher Education cess to be levied at the rate of 3% calculated on tax payable plus applicable surcharge.

 
PERSONAL INCOME TAX STRUCTURE
Total Income TaxRates

Up to INR 160,000 (a)(b)

NIL

INR 160,001 to INR 300,000

10%

INR 300,001 to INR 500,000

20%

INR 500,001 and above (c)

30%

  1. In the case of a resident woman below the age of 65 years, the basic exemption limit is Rs 190,000.
  2. In the case of a resident individual of the age of 65 years or above, the basic exemption limit is Rs 240,000.
  3. Surcharge is not applicable
  4. Education cess is applicable at 3 per cent on income tax.
 
WEALTH TAX & GIFT TAX FOR MF UNITS

Wealth Tax

MF units are exempt

Gift Tax

MF units are exempt

Income Tax units provisions on clubbing for Gift of Units

Dividend Income


ST/LT Capital Gain/Loss

 

As dividend is tax free in hands of holders, hence no tax applicable on either Donee or Donor

If the transferee or donee is

  • Spouse, Son’s wife or minor son: gain/loss clubbed with that of the donor of units
  • Other independent donee: gain/loss treated as donee’s gain/loss and not clubbed with that of donor
 
SECURITIES TRANSACTION TAX
Equity Oriented Fund Other than Equity Oriented Fund

0.25% of redemption value

Exempt from securities transaction tax

Mutual Fund would also pay securities transaction tax wherever applicable on the securities bought/sold

As per Section 94(7)
The loss due to sale of Units in the schemes (where dividend is tax free) will not be available for setoff to the extent of the tax free dividend declared; if units are :- (A) Bought within three months prior to the record date fixed for dividend declaration; and (B) sold within nine months after the record date fixed for dividend declaration.
As per Section 94(8)
The loss due to sale of original Units in the schemes, where bonus Units are issued, will not be available for setoff; if original units are :- (A) Bought within three months prior to the record date fixed for allotment of bonus units; and (B) sold within nine months after the record date fixed for allotment of bonus units.
However, the amount of loss so ignored shall be deemed to be the cost of purchase or acquisition of such unsold bonus units.

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