Lux Investing - Is fund invested in mutual fund taxable?

Is fund invested in mutual fund taxable?

I had been suggested to invest in mutual fund coz here one can get better rate of interest than fund invested in fix deposit scheme, however someone told me that the capital amount, which means the entire fund invested by me in mutual fund is taxable when the fund will be maturing, which is not applicable when some one deposit an amount in fixed deposit scheme. I want to know is it true or false?

Public Comments

As per Section 10(33) of the Income Tax Act, 1961 (‘Act’) income received in respect of units of a mutual fund specified under Section 10(23D) is exempt from income tax in India and the mutual funds are subject to pay distribution tax in debt-oriented schemes. Hence all dividends are tax-free in the hands of non-resident investors and no TDS is applicable on the same. I. Income from Units of a mutual fund specified under section 10(23D) of the Income-tax Act, 1961 (the Act) is exempt in the hands of unit holders under section 10(35) of the Act. No income tax is deductible under section 194K and 196A of the Act on any income distribution by the Mutual Fund. so no tax is there...
As the mutual fund says: Read the offer document carefully before investing... 1) Investing in equity MF's is tax free in hands of investor, if one dis invests after 1 year or more. 2) But it's risky, as mutual funds doesn't gurantee anything. 3) It depends on the market situation, i.e on Sensex. 4) Taxable amt is only the diff., i.e the profit what u get on redemption. 5) Fixed depoist scheme is again taxable, only the interest part, but the maturity amt. is assured at certsin rate of interest. 6) But MF's gives better rate of returns. 7) Debt oriented schemes are also there but they have very low returns, but are non-taxable as per IT rules. I hope i have solved ur query...
Not all ! There are some 'tax shields'!
You seem to be mixing up issues. Income from mutual fund is not taxable. Where is the question of taxing principal invested. It is better you clear your doubts with an expert to understand what is taxable and what is not rather than be guided by I heard or someone told me.
No.Amount invested in any mutual fund scheme is not taxable. Under the ELSS schemes, with a lock-in period of 3 years, you can even claim exemption for amount invested under Section 80 C subject to ceiling of Rs. 1 lakh, alonwith other eligible investments/repayments under the section. Opt for dividend schemes in MF, which too is exempt at the hands of the investor. Interest of any kind is taxable income. So, MFs score over FDs. But there is no guaranteed dividend with any MF scheme, whereas FD interest is certain income. But experience of the past is that equity diversified schemes have given better returns always.
it looks like some novice has been giving u advice.The amount u invest in MF is not taxable either at the time of investment or at time of redemption . Mutual Funds, now a days, normally are open ended, which means there is no fixed maturity period.u can withdraw the amount at any time say in a month or after 10 years. it is as per your requirments. If u are investing in a equity based Mutual Fund the gains are not taxable if u withdraw the money after one year. As far as the dividends are concerned no MF gurrantees a fixed rate of dividend or returns.( u do not get Interest on MF but dividends as and when declared by the MF ).
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