Mutual funds; Offer 3 Types of Income Tax Savings Benefits..! - MYREALITY.In, Real Estate, Share Market, Mutual Fund, Insurance
Trending
Powered by Blogger.
Thursday, August 10, 2017

Mutual funds; Offer 3 Types of Income Tax Savings Benefits..!

Mutual funds; Offer 3 Types of Income Tax Savings Benefits..!

by Mr. Srikanth Meenakshi, FundsIndia.com


There are 3 types of income tax savings one can have with investing in mutual funds

I. Income Tax deductions

2. Income  tax exemptions and

3. Income  indexation benefits.

I. Income Tax deductions

The first one, tax deduction, applies only to equity-linked saving scheme (ELSS), which are tagged as tax-saving schemes. Using these funds, the money invested in them would be subtracted (deducted) from the taxable income of an investor, thereby reducing the tax outgo.

Investments in these funds are locked for 3 (Three) years but any gains after this period would be tax exempt. There is a limit of Rs.1.5 lakh on this annually.

2. Income  tax exemptions and

The second type tax exemption would apply to domestic equity oriented funds.
Many equity funds such as large-cap funds, diversified funds, and balanced funds would fall in this category.

In this case, the profits made after at least 1 year of holding will be considered ‘long-term gains’ and be exempt from tax. However, the money invested in the fund itself would have to be after payment of tax.

3. Income  indexation benefits.

The third type, indexation benefit, applies to all other types of mutual funds, specifically debt funds, and provides the benefit of reducing the tax outgo by reducing the reportable gains from an investment. You are investing in two tax deductible funds (for a total of Rs. 72,000 per year), and in a balanced fund (for Rs. 36,000 a year).
Srikanth Meenakshi, FundsIndia.com

You will get the benefit of reducing your taxable income with the first fund, and exemption from taxability of long-term gains from your balanced fund.
The category of funds that you have chosen fit your timeline, risk tolerance, and objective. In terms of fund selection, you are doing fine with your tax-saving funds.


For the balanced fund, please go with ICICI Prudential Balanced fund.
Mutual funds; Offer 3 Types of Income Tax Savings Benefits..! Reviewed by S. Chitra on August 10, 2017 Rating: 5 Mutual funds; Offer 3 Types of Income Tax Savings Benefits..! by Mr. Srikanth Meenakshi, FundsIndia.com There are 3 types of inco...

No comments:

Google+ Followers