There are always changes taking place in the mutual funds returns in budget plan every year, in India. In the 2018 budget of India, the government has added a change in the long-term capital gains tax on equity and equity mutual funds. So, for investors, it is essential to know how the budget for mutual funds is going to work from 2018 onwards in India.
Below are the guidelines on how mutual funds returns are taxed from 2018 in India:
- For short-term capital gains:
The returns are said to be short-term capital gains (STCG) when an investor sells an equity mutual funds within a year. The tax rate is 15% for an STCG. It means for Mutual Funds Returns, one needs to pay 15% of returns as tax from STCG. Additionally, one also needs to pay 15% of the returns as the tax, which would be an STCG if the fund is a non-equity mutual fund that has 3 years of time frame.
- For long-term capital gains:
The returns are said to be long-term capital gains (LTCG) when an equity mutual funds are sold after being held for more than a year. For equity mutual fund from LTCG, one needs to pay 10% of returns as tax, whereas, and one needs to pay 20% of returns as the tax for a non-equity mutual fund from LTCG.
- For dividend distribution tax (DDT):
One needs to pay DDT of 10% on equity mutual funds and DDT of 25% on debt mutual funds, whereas for NRIs, only 5% of DDT is applicable for Infra Debt Funds.
There are no changes in other funds on budget 2018 in India.
