Mutual Funds Income Tax Section

This instrument come with a 3 year lock in period.

Mutual funds income tax section. Investments in nps qualify for exclusive tax deduction under section 80ccd 1b. Whenever you are to file your income tax return then it is advised that you discuss with an income tax consultant first. Elss or equity linked savings scheme is a type of diversified equity mutual fund that is qualified for tax exemption under section 80c of the income tax act. All elss funds qualify for the tax deduction under section 80c.

These funds invest in government and municipal bonds also called munis that pay tax free interest. In addition to above there is 0 001 securities transaction tax stt changed from 0 25 from june 2013 is levied on redemption of equity mutual funds irrespective of the holding period. Best tax saving investments u s 80c. There is no stt for non equity mutual funds.

Section 10 34 10 35 income tax act. For the purpose of income tax an equity oriented mutual fund is the fund which invests at least 65 of its fund corpus into equity and equity related instruments. Studies in the past have suggested that equity has delivered higher inflation adjusted return than any other asset class over the longer horizon. There are some mutual funds schemes that offer tax savings and are called elss or equity linked savings schemes and these are eligible for deduction under section 80c of the income tax act 1961.

These are mutual funds schemes that are invested in stocks and come with a mandatory lock in period of three years. In addition section 10 35 talks about income received from investment in mutual funds also being exempt from taxes. Investors can claim tax deduction of up to rs 1 5 lakh under section 80c of the income tax act. Only investments in equity linked saving schemes or elsss qualify for tax deduction under section 80c.

Capital gains tax on mutual funds in india for fy 2019 20 stt on mutual funds. You can claim a deduction up to rupees 1 50 000 only under section 80c. Most investors prefer to invest in this mutual fund instrument as it offers capital appreciation and tax benefits as well. Mutual funds that fall under the category of pension and elss will help you with tax savings under section 80c of the income tax act.