Few Questions on TAX… which everyone wants to know

POSTED BY sunil ON April 25, 2012 11:39 am COMMENTS (4)

Dear All,

I have below queries regarding INcome Tax to be paid and few more…. Could you please help me in clarifying these…

1. Capital Gains on Tax Saving Mutual Funds : Do we need to pay tax on the amount appreciated for tax saving Mutual Funds, once the Funds are out of 3 yr lock in period and we opt to redeem them?

2. Capital Gains on Open-Ended Mutual Funds : What is pattern here?
Do we need to pay tax on the amount appreciated if we redeem before one year and any amount redeemed after one year in NON_TAXABLE??

3. Capital Gains on Shares : If we sell our shares before one year we need to show/pay tax as per our tax slabs…. NOW, what happens if we don’t show the capital gains (a very small capital gains in my case though, 2000-3000).

4. I have read that 1 Penalty of Rs.200 per day shall be levied for delay in furnishing TDS return.

Sorry for the exhaustive list but i want to get these things clarified.

4 replies on this article “Few Questions on TAX… which everyone wants to know”

  1. sunil says:

    Thanks a lot..

    1. Dear Sunil, the taxation of Debt funds is different from Eq. funds for your question no. 2> I hope you were asking for Eq. funds only & same is already discussed.



  2. sunil says:

    thanks a lot BanyanFA

  3. BanyanFA says:

    1. You do not need to pay tax on tax saving funds if you redeem after 3 years. They follow the 1 year LTCG rule on taxation combined with no redemption within 3 years;
    2. For Open ended funds, the taxability depends upon the type of the fund. The following link explains in great details on all tax aspects associated with taxation on mutual funds. http://insight.banyanfa.com/?p=690
    3.Capital Gain on shares sold within 1 year is classified as Short Term (STCG). STCG on shares is charged at 15% flat and not as per tax slabs. Non share STCG is charged as per tax slabs. There is a small exception to this 15% rule, If you are a resident in India, then any income upto the minimum tax slab is tax free. For example, if your salary is 150K and your STCG on shares is 60K, then you have to pay STCG on 10K only (150K+60K – 200K minimum slab);
    Not paying tax is inviting trouble, irrespective of how small it is. Your incomes can not escape Tax Man’s eyes, as your STCGs are linked to your PAN and the tax officer can always run a report of your income by your PAN. Whether he would do so or not, I won’t comment.
    4. Penalty on TDS return is on the person deducting TDS and not on the person whose’ TDS has been deducted.


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