Tips on How to Manage Income Tax on Earnings from Mutual Funds


Income from mutual fund can be categorised into two streams: Dividends and appreciation when realised is taxed as capital gains. The mutual fund schemes can be divided into two categories for tax purposes. In first category, fall all equity oriented scheme and rest of the schemes fall in the second category.

Any mutual fund scheme which keeps minimum of 65% of their corpus invested in the Indian companies which are listed in India fall under equity oriented schemes. Likewise, any fund which invests minimum 90% of its corpus in an ETF which in turn invests minimum of 90% of its corpus in these companies is also treated like equity oriented schemes. One of the popular scheme amongst taxpayers ELSS eligible for deduction under Section 80C, falls under this category. By this definition all aggressive hybrid funds which maintain their minimum 65% investment in such companies are treated as equity oriented schemes. All other schemes like conservative hybrid schemes, debts funds, gold ETF, gold funds and international funds fall in the second category……………………………

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