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Please consider following cases 1. rs 20000 FD for 1 year and above(@9.0%) 2. rs 20000 mutual fund for 1 year and above(@9.0% debt fund). (i)which one is better? (ii)in 1st interest will be taxable and 2nd it will come under long term gain and hence tax free. is it correct? Thanks in advance. asked Mar 27 '12 at 18:32 by suren 41●14●17●25 |
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Interest on fixed deposit would be added to your taxable income (no matter, for how much time the money has been invested) and would be taxed as per slab rates. Tax applicable may be 0-30.6% depending on person's other income. Gains from debt mutual funds, fixed maturity plans (FMP) mutual funds and all such non-equity mutual funds, if they are redeemed in less than a year have same taxabliity as FD interest as above. Gains from non-equity mutual funds with more than a year's investment would be taxable at a flat rate of 10% or 20% with indexation benefit. Computation for income tax on LTG with indexation benefit:
Purchase Year = A, Purchase Cost = P, Cost Inflation Index (CII) for purchase year = X CII has increased by 8-12% rate in last 3-4 years. So if you invest into a non-equity mutual fund now before 31st March, 2012 and sell it after 1st April, 2013, you may have zero tax on gains. You should also read this article: A 10% Return on FMPs, Tax Free! answered Mar 27 '12 at 18:50 by Pankaj Batra 5.2k●3●20 do a person need to do this calculation and file the tax or mutual fund company will calculate , deduct tax and whatever is the remaining will be given to person as this calculation is complex:)
second thing aren't stocks/mutual funds sold after more than one year not taxable?
(Mar 27 '12 at 19:09)
suren
Mutual fund companies (AMC) don't compute tax and deduct it. Its the investor's responsibility to compute and pay taxes.
(Mar 27 '12 at 19:13)
Pankaj Batra
aren't stocks/mutual funds sold after more than one year tax exempted?
(Mar 28 '12 at 21:52)
suren
Only equity based mutual funds and stocks listed on Indian stock markets have tax free long term gains.
(Mar 28 '12 at 22:03)
Pankaj Batra
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