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The Tax Maze never ceases to amaze. There are various options available to investors in equity, debt etc. And each type of investment is taxed differently according to the residential status, period of holding, type of investment & tax bracket.
Here is a snapshot of the taxation (2012-2013) on Mutual Fund Schemes in India. This if of help in understanding the tax implications and judiciously allocating funds across assets.
| Dividend |
|
|
|
|
Resident Individual/HUF |
Domestic Corporates |
NRI** |
| Equity Oriented Schemes |
Tax Free |
Tax Free |
Tax Free |
| Other than Equity Oriented Schemes |
Tax Free |
Tax Free |
Tax Free |
| Dividend Distribution Tax (Payable by the Scheme) |
|
|
|
|
Resident Individual/HUF |
Domestic Corporates |
NRI** |
| Equity Oriented Schemes* |
Nil |
Nil |
Nil |
| Other than Equity Oriented Schemes |
12.5%+ 5% Surcharge+ 3% Cess |
30%+ 5% Surcharge+ 3% Cess |
12.5%+ 5% Surcharge+ 3% Cess |
|
13.519% |
32.445% |
13.519% |
| Money Market & Liquid Schemes |
25%+ 5% Surcharge+ 3% Cess |
30%+ 5% Surcharge+ 3% Cess |
25%+ 5% Surcharge+ 3% Cess |
|
27.0375% |
32.445% |
27.0375% |
| Long Term Capital Gains (Units held for more than 12 months) |
|
|
|
|
Resident Individual/HUF |
Domestic Corporates |
NRI** |
| Equity Oriented Schemes* |
Nil |
Nil |
Nil |
| Other than Equity Oriented Schemes |
12.5%+ 5% Surcharge+ 3% Cess |
30%+ 5% Surcharge+ 3% Cess |
12.5%+ 5% Surcharge+ 3% Cess |
|
13.519% |
32.445% |
13.519% |
| Money Market & Liquid Schemes |
25%+ 5% Surcharge+ 3% Cess |
30%+ 5% Surcharge+ 3% Cess |
25%+ 5% Surcharge+ 3% Cess |
|
27.0375% |
32.445% |
27.0375% |
| Short Term Capital Gains (Units held for 12 months or less) |
|
|
|
|
Resident Individual/HUF |
Domestic Corporates |
NRI** |
| Equity Oriented Schemes* |
15% + 3% Cess |
15% +5% Surcharge # + 3% Cess |
15% + 3% Cess |
|
15.45% |
16.223% |
15.45% |
| Other than Equity Oriented Schemes |
30%^ + 3% Cess |
30% +5% Surcharge # + 3% Cess |
30%^ + 3% Cess |
|
30.9% |
32.445% |
30.9% |
^Assuming the investor falls into the highest tax bracket
# The total income of the corporate would exceed Rs. 1 Crore
| Tax deducted at source pertaining to NRI Investors$ |
|
|
|
|
Short Term Capital Gain |
Long Term Capital Gain |
|
| Equity Oriented Schemes |
15.450% ## |
Nil |
|
| Other than Equity Oriented schemes (Listed) |
30.90% |
20.60%@ |
|
| Other than Equity Oriented schemes (Unlisted) |
30.90% |
10.30% |
|
*STT @ 0.25% will be deducted on equity oriented schemes at the time of redemption and switch to the other schemes.
Mutual Fund would also pay securities transaction tax wherever applicable on the securities bought/sold
** The tax rates are subject to DTAA benefits available to NRI’s. As per the Finance Act, 2012, submission of tax residency certificate containing prescribed particulars, will be a necessary (though not sufficient) condition for granting DTAA benefits to non-residents
*** These are the tax rates applicable to capital gains, in case the rate of tax is lower than 20% and if the NRI does not have a Permanent Account Number, then for the purpose of TDS, the withholding tax rate would be 20%
## Subject to NRI’s having Permanent Account Number in India
$ As per the Finance Act 2012, with effect from July 1, 2012, a list of transactions is proposed to be specified, wherein the rate for tax deduction at source needs to be determined by the assessing officer. In case the transaction of sale of mutual fund units by an NRI gets covered within such list, then an application would be required to be made to the assessing officer to determine the tax deduction at source rate
$$ As per the Finance Act, 2012, in case of transfer of unlisted securities by non-resident, the tax rates in case of long term capital gains shall be 10% (plus surcharge and cess) without indexation
@ after providing for indexation
The information is for general purposes only. Please consult your financial advisor before making any investment decisions.
