Taxes on Money Market Funds

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Taxes on Money Market Funds

How are taxes on money market mutual funds calculated? Is it taxes as the same rate as equity short term and long term capital gain taxes?

Profile photo of Rahul Kohli Asked By: Rahul Kohli 1 replies 1 helpful answers Last Updated: 4 months ago
  • Profile photo of Rahul KohliRahul Kohli
    Participant

    How are taxes on money market mutual funds calculated? Is it taxes as the same rate as equity short term and long term capital gain taxes?

  • Profile photo of Chetan ChandakChetan Chandak
    Moderator

    For tax purposes the  Money Market Funds are categorized as “Debt Funds” or “Non Equity Oriented Fund” and its will be taxed accordingly.

    Long term capital gain:

    i) Without Indexation -10%

    ii) With Indexation – 20%

     Short term capital gain:

    Will be taxes as per the slab rate

     Dividend:

    Any dividend received by any investors from all kinds of MF schemes, is tax free in the hands of investors under Section 10(35)(a). But the AMC have to pay the dividend distribution tax on such distributed/declared dividend.

    Note: In case if the individual is resident in India for tax purposes and if his total income (other than capital gain) is below basic exemption limit, then he can use his unexhausted basic exemption limit against his taxable capital gain to reduce the tax on his gains.

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