In this video, in our series on the impact of tax on mutual fund investments, we discuss how short term debt funds are taxed. FundooMoney Website: www.fundoomoney.com
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
