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How to make tax gains on stock market losses

October 23, 2008

Tax on equity-oriented MFs

In the case of equity-oriented mutual funds with dividend payout option, any dividends received in the hands of investors are tax exempt.

The tax implication on capital gains arising on sale of units is the same as in the case of equity oriented mutual funds with growth option.

In the case of debt-oriented mutual funds, dividends declared are tax free in the hands of an investor while long term capital gains are taxed at 10% without indexation, or 20% with indexation.

In the case of short term capital gains the rate corresponding to the tax bracket in which the investor falls becomes payable.

(Excerpt from Intelligent Stock Market Investing  by N. J. Yasaswy. Published by Vision Books.)