Mutual Fund SIP Mutual funds have become a means of popular investment in search of money creation and financial stability for individuals. However, understanding the tax effects of a variety of mutual funds (equity, hybrid and date) is important to optimize returns. There is a wide nature of taxing the benefits earned from these investment devices here.

Equity mutual fund
Equity mutual funds mainly invest at least 65% of their properties in stocks. The rules of levying taxes on equity schemes of mutual funds are similar to the rules that apply to investing in equity stocks. The process of taxing the benefits from these funds depends on the holding period.

Shortterm Capital Gain –
If units are sold within a year, 20% tax is levied on profit.

If the units are kept for more than a year, long term capital gains, then 12.5% ​​tax is levied in the financial year without independence benefits of more than Rs 1.25 lakh.

Date mutual fund
Date mutual funds now depend on whether you bought them before April 2023 or later. If you buy a unit of these funds after April 2023, then your benefits will be taxed according to your income tax level. But you can now claim a discount of Rs 60,000. If you buy the unit before April 2023, your benefits will be taxed at 12.5% ​​after two years of holding. You do not get exemption, but this year's budget has increased the original exemption limit, which reduces your tax liability.

Hybrid mutual fund
Hybrid mutual funds are also called balanced funds, their investment is divided into shares and loan devices.

The taxation depends on the exposure of the share.

Equity-Oriented Hybrid Fund:
If at least 65% of the investment in a fund is in the share, it is taxed like equity mutual funds. STG20 percent is, while LTCG above Rs 1.25 lakh is taxed at 12.5%.

Date Oriented Hybrid Fund –
If the stock exposure is less than 65%, the tax is similar to the date fund. Keeping in mind the above rules, investors should invest with complete information when investing the fund is equal oriented or date oriented.

Results for investors
Given the tax rate in terms of mutual funds, mutual funds are the right investment for investors falling in the higher tax category.

For example, even if the investor's tax rate is 30%, the benefits earned through mutual funds are levied at a fixed rate under capital gains as per the above. Eliminating sequencing benefits for date funds makes them less attractive to long -term investors. High -income Indians can now prefer equity funds or alternative investment options to reduce their tax burden. Hybrid funds with high equity exposure can benefit from their adaptation and remedies. Investors should align their mutual fund investments with their financial goals and tax liabilities.

For example, even if the investor's tax rate is 30%, the benefits earned through mutual funds are levied at a fixed rate under capital gains as per the above. Eliminating sequencing benefits for date funds makes them less attractive to long -term investors. High -income Indians can now prefer equity funds or alternative investment options to reduce their tax burden. Hybrid funds with high equity exposure can benefit from their adaptation and remedies. Investors should align their mutual fund investments with their financial goals and tax liabilities.