Tax on debt funds

Debt funds, as a category, include liquid, ultra short-term, short-term, income accrual, dynamic bond, and gilt funds. It also includes all debt-oriented funds as MIPs and other hybrid non-equity funds. International funds and gold funds also follow the same taxation as debt funds. For these funds, short-term is a holding period of less than 36 months. Long-term holding is a period more than 36 months. On short-term capital gains, you are taxed at your slab rate. That is, if you’re in the 20% tax bracket, you pay 20% of your capital gains as tax. If you’re in the 10% tax … Click here to continue…..

Tax on equity funds

Taxation rules on equity and equity-oriented funds are fairly simple. A holding period of more than 12 months qualifies as long-term holding; less than that is short term. Equity-oriented funds have no tax on long-term capital gains; i.e., if you sell your fund after 12 months from the date you bought it, you don’t pay capital gains tax. On short-term holding, the capital gains tax is a flat 15 per cent, no matter which tax bracket you belong to. Securities transaction tax (at 0.001%) will apply on all redemptions of equity schemes. That is about one paisa for every Rs … Click here to continue…..

What is MF capital gain?

Capital gain is simply the profit on your investment when you sell your mutual fund units. It is the difference between the market value of your mutual fund units at the time of sale and the cost of such units. The gains come in from the appreciation in your fund’s NAV. Capital gains can be short term or long term, depending on how long you hold the fund units. Holding period is the number of years between when you first bought a unit and sold it. What is considered short-term and long-term holding varies between equity and debt/gold mutual funds.

Is it better choice to exit from stocks and park that fund in Fixed Deposit right now?

In India, bank fixed deposit rate is hovering around 7.5%-9% per annum. Senior citizen will get 0.5% extra. So,100 rupees will become at max 110 rupees in fixed deposit. Now consider inflation. Officially inflation rate is hovering around 7%-8% in India. But calculate your household expense per month. You will find if it requires Rs-100 to cover your household expense right now then after 1 year that same expense will shoot up to Rs-110-112. Approx 10% to 12% increase annually. You may take help of back calculation. Calculate how much it was cost for your lunch/dinner 1 year back and … Click here to continue…..

How to Manage our Underfunded Goals

Mathematical accuracy and performance in real time are different ballgames altogether. The maths and the returns might look perfect on paper but the discrepancies soon show as some investment performances fail to meet your expectations. Hence, the corpus created is inadequate for the fulfilment of the goal. Saving and investing to meet our financial goals is the practice of every investor. However, despite that there could be many reasons why there could be a possible shortage: The future Cost of a Goal The cost of the goal may have gone up more than you had estimated. The percentage of inflation … Click here to continue…..

ELSS Vs Tax Savings Fixed Deposits

Tax savings fixed deposits have a minimum lock in period of five years. Withdrawal before the expiry of the lock in period will attract tax treatment on the principal. Tax rebate for such a scheme is extended only for the principal and not for the interest unless it is reinvested. The interest amount upto 10,000 INR is non-taxable other wise 10% TDS is applicable. ELSS trumps this scheme both on counts of lock in period and tax treatment. The lock in period for ELSS is only three years and the long term capital gains and dividends are totally tax free. … Click here to continue…..

ELSS Vs Sukanya Samriddhi Scheme (SSS)

Sukanya Samriddhi Scheme (SSS) is an investment option for you only if you have a girl child of ten years or below. The age limit is 11 years only for 2015. The return for the FY2015-2016 is 9.2%. In ELSS good returns can be earned due to exposure to equities and the principal along with the growth can be redeemed after three years. ELSS has a minimum lock up period of three years. In SSS 50% of the withdrawal is allowed only when the girl child turns 18. The returns compared to ELSS are moderate due to no exposure to … Click here to continue…..

ELSS vs National Savings Certificate (NSC)

NSC is a scheme launched by the Government of India. It is a fixed income earning instrument and the interest rates are almost at par with other Government tax savings instruments. NSC is compounded half yearly and the interest rates are declared annually. The current rate of interest is 8.5% compounded half yearly for an investment period of five years and 8.8% compounded half yearly for an investment period of ten years. The major disadvantage of NSC over ELSS is the tax treatment of interest earned. The interest earned in NSC is taxable and for this purpose it is reinvested … Click here to continue…..