Do you have to pay Tax Deducted at Source (TDS) on mutual fund redemptions?
Answer
Answer
No Unlike fixed deposits and recurring deposits, mutual funds redemptions do not attract tax deducted at source (TDS).
However, that doesn’t mean mutual funds are tax free. Each mutual fund, depending on which asset class it invests in and for how long it is held, attracts a different tax liability.
The table below explains how various mutual funds are taxed according to their asset classes.
Type of mutual fund
Short-term capital gains tax
Long-term capital gains tax
Equity mutual fund
15%
10% on amount in excess of Rs. 1 lakh
Balanced mutual funds
15%
10% on amount in excess of Rs. 1 lakh
Debt mutual funds
As per the tax slab
20% after indexation