Tax Reckoner 2017-18
Snapshot of Tax rates specific to Mutual Funds
The rates are applicable for the financial year 2017-18 and are subject to enactment of the Finance Bill, 2016.
 
Tax Implications on Dividend received by Unit holders      
  Individual/ HUF Domestic Company NRI
Dividend
Equity oriented schemes Nil Nil Nil
Debt oriented schemes Nil Nil Nil
 
Tax on distributed income rates (payable by the scheme)**
  Individual/ HUF Domestic Company NRI*
Equity oriented schemes* Nil Nil Nil
Money market and Liquid schemes 25%+12% Surcharge +3% Cess = 28.84% 30%+12% Surcharge+3% Cess = 34.608% 25%+12% Surcharge+3% Cess = 28.84%
Debt schemes (other than infrastructure debt fund) 25%+12% Surcharge+3% Cess = 28.84% 30%+12% Surcharge+3% Cess = 34.608% 25%+12% Surcharge+3% Cess = 28.84%
Infrastructure Debt Fund 25%+12% Surcharge+3% Cess = 28.84% 30%+12% Surcharge+3% Cess = 34.608% 5%+12% Surcharge+3% Cess = 5.768%
* Securities transaction tax (STT) will be deducted on equity funds at the time of redemption/ switch to the other schemes/ sale of units.
** For the purpose of determining the tax payable by the scheme, the amount of distributed income has to be increased to such amount as would, after reduction of tax on such increased amount, be equal to the income distributed by the Mutual Fund. In other words, the amount payable to unit holders is to be grossed up for determining the tax payable and accordingly, the effective tax rate would be higher.
Capital Gains Taxation
 
  Individual/ HUF$ Domestic Company@ NRI $#
Equity Oriented Schemes
Long Term Capital Gains (units held for more than 12 months ) :: Short Term Capital Gains ( units held for 12 months or less )
Equity term capital gains Nil Nil Nil
Short term capital gains 15% 15% 15%
 
Other Than Equity Oriented Schemes
Long Term Capital Gains (units held for more than 36 months ) :: Short Term Capital Gains (units held for 36 months or less)
  Individual/ HUF Domestic Company NRI*
Long Term Capital Gains 20% & 20% & Listed - 20% &
Unlisted - 10% *
Short Term Capital Gains 30%^ 30% ^^/25%^^^ 30%^
 
Tax Deducted at Source (Applicable only to NRI Investors)#
  Short term capital gains Long term capital gains
Equity oriented schemes 15% Nil
Other than Equity oriented schemes 30% ^ Listed - 20% &
Unlisted - 10%*
 
$ Surcharge at 15%, is applicable where income of Individual/HUF unit holders exceeds Rs. 1 crore. As per Finance Act, 2017, surcharge at 10% to be levied in case of individual/ HUF unit holders where income of such unit holders exceeds Rs. 50 lakhs but does not exceed Rs. 1 crore. Further, Education Cess at 3% will continue to apply on aggregate of tax and surcharge.
@ Surcharge at 7% is applicable where income of domestic corporate unit holders exceeds Rs 1 crore but does not exceed 10 crores and at 12% where income exceeds 10 crores. Further, Education Cess at 3% will continue to apply on aggregate of tax and surcharge.
# Short term/ long term capital gain tax will be deducted at the time of redemption of units in case of NRI investors. & After providing indexation.
* Without indexation.
^ Assuming the investor falls into highest tax bracket.
^^This rate applies to companies other than companies engaged in manufacturing business who are taxed at lower rate subject to fulfillment of certain conditions.
^^^ If total turnover or gross receipts during the financial year 2015-16 does not exceed Rs. 50 crores. 
Further, the domestic companies are subject to minimum alternate tax not specified in above tax rates.
Transfer of units upon consolidation of mutual fund schemes of two or more schemes of equity oriented fund or two or more schemes of a fund other than equity oriented fund in accordance with SEBI (Mutual Funds) Regulations, 1996 is exempt from capital gains.
Transfer of units upon consolidation of plans within mutual fund schemes in accordance with SEBI (Mutual Funds) Regulations, 1996 is exempt from capital gains. Relaxation to non-residents from deduction of tax at higher rate in the absence of PAN subject to them providing specified information and documents.

 

 
Dividend Stripping: The loss due to sale of units in the schemes (where dividend is tax free) will not be available for setoff to the extent of the tax free dividend declared; if units are:
(A) bought within three months prior to the record date fixed for dividend declaration; and
(B) sold within nine months after the record date fixed for dividend declaration.

Bonus Stripping: The loss due to sale of original units in the schemes, where bonus units are issued, will not be available for set off; if original units are:
(A) bought within three months prior to the record date fixed for allotment of bonus units; and
(B) sold within nine months after the record date fixed for allotment of bonus units. However, the amount of loss so ignored shall be deemed to be the cost of purchase or acquisition of such unsold bonus units.