Equity Investments are a very common type of investments but beneficial for those who are ready to take risk. Small scale investors generally don’t like to invest their savings in Equity. It is from where concept of mutual funds arises. Mutual Funds are small – small units where people used to get their savings invested and AMC (Asset Management Company) who is responsible for managing the money received from mutual funds get invested into either equity or debt funds thus giving rise to liquidity in the market.
As per Section 10 (38) , In case if assessee sells his Equity Oriented Mutual Funds already held by him for more than 1 year and on which STT is paid by him + these funds are listed on stock exchange then capital gain on these mutual funds will be exempted. This means you don’t have to give tax on profit made by you by selling mutual funds.
As per Section 80C , an assessee can get deduction of money invested in mutual funds upto Rs. 1,50,000 . However, there are only certain prescribed “Tax Saver Mutual Funds” on which deduction could be claimed by assessee.
- We can say that a person not only can get an exemption of profit earned from selling mutual funds but also can claim deduction in respect of investment from mutual funds.
- Also, Dividend received from mutual funds are Tax exempted and return on Mutual funds are generally higher than investing in any FD or creating RD.
As Mutual funds are providing Tax benefits there are certain more deductions like Section 80G. Income tax section 80g to know about it more
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