An Alfred Jordan Initiative Helpline: +91 98307 56567 | Email: This email address is being protected from spambots. You need JavaScript enabled to view it.  

Mutual Funds Taxation

Tax on MF Investments : AY 14-15

10

These changes announced in the Budget pertain to taxation norms on mutual funds which will be effective from 1 April 2013, after the enactment of Finance Act. The details for FY14 appended below, are provided to you for general purposes only, and should not be construed as any form of advice. You should consult a qualified Tax consultant for specific tax implications for your self.

       
Dividend Distribution Tax
       
For the period 1st April 2013 to 31 May 2013
Category Individual/HUF Domestic Company NRI
Equity Oriented Scheme Nil Nil Nil
       
Debt Scheme 12.5% + 10% Surcharge + 3% Cess = 14.163% 30% + 10% Surcharge + 3% Cess = 33.99% 12.5% + 10% Surcharge + 3% Cess = 14.163%
       
Liquid Scheme 25% + 10% Surcharge + 3% Cess = 28.325% 30% + 10% Surcharge + 3% Cess = 33.99% 25% + 10% Surcharge + 3% Cess = 28.325%
       
       
For the period 1 June 2013 to 31 March 2014
Category Individual/HUF Domestic Company NRI
Equity Oriented Scheme Nil Nil Nil
       
Other than Equity Oriented Scheme 25% + 10% Surcharge + 3% Cess = 28.325% 30% + 10% Surcharge + 3% Cess = 33.99% 25%* + 10% Surcharge + 3% Cess = 28.325%
       
       
Capital Gains
       
Short-term capital gains Tax
Category Individual/HUF2 Domestic Company NRI2
Equity Oriented Scheme1 15% + 3% Cess = 15.450% 15% + 5% Surcharge3 + 3% Cess = 16.223% 15% + 3% Cess = 15.450%
       
Other than Equity Oriented Schemes 30%4 + 3% Cess = 30.900% 30% + 5% Surcharge3 + 3% Cess = 32.445% 30%4 + 3% Cess = 30.900%
       
Long-term capital gains Tax
Category Individual/HUF2 Domestic Company NRI2
Equity Oriented Scheme1 Nil Nil Nil
       
Other than Equity Oriented Schemes 10% without indexation or 20% with indexation whichever is lower + 3% Cess 10% without indexation or 20% with indexation whichever is lower + 5% surcharge3 + 3% Cess 10%^ without indexation or 20%^ with indexation5whichever is lower + 3% Cess
       
Without Indexation 10.300% 10.815% 10.300%
       
With Indexation 20.600% 21.630% 20.600%
       
Investors based in countries which have a Double Taxation Avoidance Agreement (DTAA) with India, may avail of beneficial rate/provisions, if any, as per the DTAA subject to production of tax residency certificate. As per Finance Bill 2013, the non-resident would be required to provide other documents/information as may be prescribed by the Government of India. 
       
Investors should be aware that the interpretation of the relevant fiscal rules may vary, and that the fiscal rules can change from time to time. In view of the individual nature of tax consequences, you are advised to consult with you own professional tax advisor on the specific implication of tax provisions.
       
*In case of infrastructure debt funds, the rate of DDT in case of an NRI would be 5% plus 10% surcharge and 3% cess, i.e. the effective rate would be 5.665%.
       
1Securities Transaction Tax (STT) will be deducted on equity funds at the time of redemption and switch to the other schemes. 
       
       
2A surcharge of 10% will be applicable to the capital gains tax rate in case the total income of the Individual/HUF and an NRI exceeds 1 crore. 
 
     
3In case of a domestic company, surcharge of 5% will be levied if the total income exceeds 1 crore, and 10% if the total income exceeds 10 crore.
       
4All the above rates have been illustrated with various assumption which may or may not be applicable to you.
       
5In case of a Non-Resident Indian (NRI) investor, the long-term capital gain tax rate for transfer of unlisted securities will be 10% (plus applicable surcharge, if any and education cess) and no indexation benefit will be available to him/her.
       
^These are the tax rates applicable to capital gains, in case the rate of tax is lower than 20% and if the an NRI does not have a Permanent Account Number, then for the purpose of TDS, the withholding tax rate would be 20%.
Share