Mutual Fund investments are subject to market risks, and income tax too. Given the ease and passive nature of mutual fund investments, a lot of people invest in mutual funds. Like almost any other form of investment such as Fixed Deposits, stocks, etc., mutual funds also attract certain taxes on the returns gained via investing in them. Getting yourself familiar with taxation applicable on stock investments will help you understand taxation against mutual fund gains. Read on to know how to file Income Tax Return (ITR) for mutual funds on new tax portal.
To begin with, there are two types of mutual funds. Equity-based and debt-based mutual funds.
While equity-oriented mutual funds attract tax similar to stock investments, debt mutual funds behave a little differently.
Digging deeper, there are two types of tax on mutual funds depending on their tenure: STCG(Short Term Capital Gain Tax) and LTCG(Long Term Capital Gain Tax).
For equity-based mutual funds, STCG tax is applicable for returns gained from the selling of mutual fund units within 1 year of investment. The tax rate applied here is 15%.
For LTCG, which is applicable for units sold after 1 year, gives some breathing space. Gains up to a limit of ₹1 Lakh are exempted from any tax. While any gain above ₹1 Lakh would attract a tax rate of 10%.
However, for debt-based mutual funds, which are mutual funds that invest in debt securities, anything sold and gained before 36 months or 3 years would fall under STCG, which would be taxed as per the tax slab of the investor. For LTCG, the tax rate is 20% in the case of debt funds.
One more point to note is that if the dividend to be received by anyone exceeds ₹5000, then there is a TDS liability of 10% on the dividend payout.
Now, let’s talk about dividends. The dividends received from your mutual fund investments are applicable to be taxed under your respective tax slab.
Also Read: Taxation In Mutual Funds
But how to file income tax return for the gains from their mutual fund investments, on the new Income Tax portal? Scroll down to find out.
You will need to declare the dividends received by you through your mutual fund investments. The details need to be entered in the section ‘Schedule of Other Sources’. Here, the detail of dividends received need to be entered on a quarterly basis. In the column of each respective quarter, the dividend received during that quarter should be written. In case you have been subjected to TDS on your dividend income, then you could apply for credit by entering the due details in the ‘TDS other than Salary’ section.
Also Read: A Detailed Guide For Checking TDS Status Using Your PAN Card
This is pretty easy these days. You could simply access the app from which you invest in mutual funds, and fetch your capital gains statement.
You are also allowed to manage your Capital Loss in the ITR. For offsetting your Short Term Capital Loss, you could use either STCG or LTCG. But for offsetting Long Term Capital Loss, you can only use LTCG. Once done with all of this, keep in mind to ‘e-Verify’ your ITR.
Investing wisely in Mutual Funds may help generate wealth. However, mutual fund gains are taxable. You can file for income tax return by following the steps mentioned above. If you are a new investor, start with Navi Mutual Fund and start hassle-free investing.
Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
What is Form 26QB for TDS? How to Download and Submit it?While purchasing a property, buyers are liable to pay various taxes. The Finance Act, 2013 made TDS... Read More »
PF Withdrawal Rules 2023 – Rules, Documents Required and TypesEPF/PF Withdrawal Employees’ Provident Fund (abbreviated as EPF) is a popular retirement sav... Read More »
Stamp Duty and Property Registration Charges in Delhi 2023It is compulsory for property buyers in the Capital to pay stamp duty in Delhi during property regi... Read More »
Income Tax Return – Documents, Forms and How to File ITR Online AY 2023-24In India, it is mandatory for all taxpayers who earn more than the basic tax exemption limit to fil... Read More »
What is Section 80CCD – Deductions for National Pension Scheme and Atal Pension YojanaThe Income Tax Act provides a number of deductions and tax benefits to taxpayers, so they can strat... Read More »
Tax on Dividend Income: Sources, Tax Rate and TDS on dividend incomeWhat are Dividends? Companies may raise funds for running their operations by selling equity. Th... Read More »
Section 112A of Income Tax Act: Taxation on Long-Term Capital GainsWhat is Section 112A? Section 112A of the Income Tax Act was announced in Budget 2018 to replace... Read More »
Section 206AB of Income Tax Act: Eligibility And TDS RateSection 206AB was introduced in the Finance Bill 2021 as a new provision pertaining to higher deduc... Read More »
What is a Credit Note in GST – Example, Format and StepsA GST Credit Note is mandatory for any GST-registered supplier of goods or services. As a supplier,... Read More »
Exemptions and Deductions Under Section 10 of Income Tax ActWhat Is Section 10 of the Income Tax Act? Section 10 of the Income Tax Act, 1961 provides tax-sa... Read More »
Section 57 of the Income-tax Act – Income from Other SourcesIt is quite likely that many entities - individuals as well as businesses - have multiple sources o... Read More »
What is Dearness Allowance? – Types, Calculation, and Current RateWhat is Dearness Allowance? Dearness Allowance Meaning - Dearness Allowance (DA) is an allowance... Read More »
Top 10 Chit Fund Schemes in India in 2023Chit funds are one of the most popular return-generating saving schemes in India. It is a financial... Read More »
10 Best Gold ETFs in India to Invest in April 2023Gold ETFs or Gold Exchange Traded Funds are passively managed funds that track the price of physica... Read More »
10 Best Demat Accounts in India for Beginners in 2023Creation of Demat accounts revolutionised the way trades were conducted at the stock exchanges. It... Read More »
20 Best Index Funds to Invest in India in April 2023What is an Index Fund? An index fund is a type of mutual fund or exchange-traded fund (ETF) that... Read More »
Best Arbitrage Mutual Funds to Invest in India in April 2023Arbitrage funds are hybrid mutual fund schemes that aim to make low-risk profits by buying and sell... Read More »
10 Best SIP Plans in India to Invest in April 2023What is SIP? SIP or Systematic Investment Plan is a method of investing a fixed amount in ... Read More »
10 Best Corporate Bond Funds in India to Invest in April 2023Corporate bond funds are debt funds that invest at least 80% of the investment corpus in companies ... Read More »
10 Best Bank for Savings Account in India [Highest Interest Rate 2023]Savings account is a type of financial instrument offered by several banks. It lets you safely depo... Read More »