Debt MFs

POSTED BY Arch ON September 30, 2010 4:40 am COMMENTS (5)

I am planning to invest in Debt fund like Reliance Medium Term-G for a period of 6 months and less than 1 year. Would there be any tax applicable for the gain?

Do share any more information on Debt funds which might be useful.

5 replies on this article “Debt MFs”

  1. No, only equity funds are that lucky 🙂

  2. Arch says:

    But shouldnt it be tax free after 1 year of holding?

  3. MIPs comes under debt category. Same taxation will be applied as shown above,

  4. Arch says:

    Is there tax implication for debt based mutual fund like mip if they are sold after one year period?

  5. Yes if you are selecting growth option – short term capital gains will be added to your income. So depending on your tax slab (20% or 30%) – tax will be applicable.

    If you are in higher tax slab go for dividend plan(payout or reinvestment), there will be 13.84% dividend distribution tax(DDT) but in your hand dividend will be taxfree.

    Eg. you invested Rs 1 lakh in DIVIDEND option today & got Rs 1 lakh 1 thousand at the end of 9 months (in between you also got a dividend of Rs 3446 (4000-554) ). If you are in highest tax slab you have to give tax on Rs 1000 @ 30.90% means tax of Rs 309. In this case total tax outflow will be Rs 863 – Rs 554(DDT) + Rs 309(short term capital gain Tax)

    But if you will invest in GROWTH option, your short term capital gain will be Rs 5000 & you need to pay tax of Rs 1545(30.9%) on it.

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