impact of tax on mutual fund investments, we discuss how short term debt funds are taxed.
Edited Highlights
0:29 How are short term debt funds taxed?

2:28 This video is part of our series on the impact of taxes on investments in mutual funds

2:56 People like to invest in short term debt funds when they don't want to invest for a long period and not take risk

3:08 Short term debt funds are ideal for short-term goals such as a down payment of a car or a consumer durable

3:33 If don't hold the investment for more than 3 years, the gains get added to your income and you pay tax accordingly

3:40 If you hold the short term debt fund units for more than three years, you get the benefit of inflation indexation

3:49 This means that the units you have bought, their acquisition costs get enhanced for tax purposes

3:58 This effectively reduces the capital gains for tax purposes

4:02 You pay 20% long term capital gains tax on your capital gains in this case

4:08 If you have taken the dividend option, remember that the fund house has to pay the dividend distribution tax (DDT). It is tax free in your hands