Mutual Fund-Investment Tax: People who have made profits in mutual funds should not miss this news at all..
The number of people investing in mutual funds in India is continuously increasing. Due to this, the net assets under management (AUM) of mutual funds increased from Rs 67 lakh crore in September to Rs 67.25 lakh crore in October 2024. Equity mutual funds have received a record investment of Rs 41,887 crore in October. Salaried people are also now investing a good amount of money in mutual funds for good returns. Tax is levied on the profit from mutual funds. If you also work and have invested in mutual funds, then you need to know how much tax will be levied on your salary and income from redemption of mutual fund units and what will be its rate.
Tax on salary is usually deducted by the employer at the time of monthly salary payment. As far as tax on income from mutual funds is concerned, this tax liability depends on whether your income is from equity mutual funds or debt funds. Also, tax liability is decided based on the period of investment.
Equity-Oriented Schemes
According to a report by Business Today, tax expert Balwant Jain says that if a person had invested in equity mutual funds for 12 months or less, then the profit made on selling the units will be considered as short-term capital gains. Under section 111A, you will have to pay tax at the rate of 20 percent. If the investment was made for more than 12 months, it will be considered as long-term capital gains.
Profits on such investments will be taxed as Long Term Capital Gains under Section 112A at the rate of 12.50% after an initial exemption of ₹1.25 lakh. It is important to note here that the exemption of ₹1.25 lakh applies only to shares listed on the stock exchange and equity mutual funds on which Security Transaction Tax (STT) has been paid.
Tax on investment in debt funds
Profits from selling units of debt mutual funds are taxed as per your income tax slab rate. If the remaining tax liability after TDS on your total income exceeds ₹10,000, you are required to pay advance tax on the prescribed dates. If this liability is less than ₹10,000, it can be paid at the time of ITR filing as Self-Assessment Tax.
Apart from this, you can also give information about your additional income to your employer in Form 12B. This will allow the employer to deduct additional tax from your salary, thereby eliminating the risk of interest due to delay or default in advance tax payment. This process will simplify tax payments and help you avoid hassles related to advance tax.