Since the last 1 and a half year, Government is trying each and every way to make India Corruption free. To do this, Government is making a lot of new changes in different sectors ranging from Income Tax to Banking Rules, etc. For all the people who are Investing in Mutual Funds? Income Tax Rules will change from April 1.
Investing in Mutual Funds? Income Tax Rules will change from April 1
From next month, April 1, a new long-term capital gains tax on equity oriented mutual funds and stocks will be applicable. As per the report, a new 10% tax on long-term capital gains (LTGG) on equity mutual fund investment was declared in Budget 2018. As per the Budget 2011 reports, long-term capital gains exceeding Rs. 1 lakh arising from the redemption of mutual fund units or equities on or after April 1, 2018, will be taxed at 10 percent (plus cess) or at 10.4 percent. All the long-term capital gains till Rs 1 Lakh will be exempt.
What is a Long-Term Capital gain?
The Profit which is gained from the selling of stock or redemption of equity mutual funds held for more than a year. A mutual fund which holds about 65% value to equities is known as equity mutual fund for taxation purposes.
5 Important Things to Know about Mutual Fund Taxation
1. At present, there is no tax on long-term gains from equities. Hence, if you sell before on or before March 31, 2018, there will be no long-term capital gains tax.
2. In case mutual funds/ stocks are sold before one year of the holding, the short term capital gains tax will apply. Currently, Short-term capital gains have remained unchanged at 15%.
3. From next month, long-term capital gains which are exceeding
Rs 1 lakh arising from saving of mutual fund units or equities will be taxed at 10%. It consists of long-term capital gains which are earned from your equity or mutual fund investments put together in the particular financial year. For Instance, if you earn about Rs 2 Lakh in combined long-term capital gains from both stocks and mutual fund investments in a financial year. In this example, taxable long-term capital gains will be Rs 1 lakh and tax liability will be Rs 10,000.
4. All the Long Terms Capital gains which are earned before January 31st, 2018 will not be taxed.
5. Last but not the least, a tax at the rate of 10% will be charged on dividend distributed from equity-oriented mutual funds from April 1. The overall tax on dividend distributed by equity mutual oriented funds is 11.648 % after including surcharge and cess.
So, there will be the effective changes made in Income Tax Rules from April 1. All the people who are making investments in various mutual funds should keep these changes in mind.
Hence, we have provided important details for people Investing in Mutual Funds? Income Tax Rules will change from April 1. If you found this information valuable, then please share it with your friends.