You pay tax on growth as STCG only before 1 yr , else its free

Manish

I think, i got the point now.
To summarize,
if I choose the dividend option then I pay DDT which is 28.325 and if I choose this growth option I pay STCG

No , if you are in 20% tax braket , then the effective return is not lesser . Its just 20% , i was mainly talking about people in highest tax bracket , who also have to pay 10% and 3% of surcharges which makes their effective rate at 28.32%

>>> 25 * (1.1) * (1.03)
28.325000000000003

Manish

sorry to question you again. As I planning to park some money into liquid funds I would appreciate your help beforehand
what I understood is that the profit from liquid funds needs to be taken care in that fiscal year tax return however i am thinking if someone comes under 20% tax bracket still he has to pay 28.32% tax on profit from liquid funds ? Can you please elaborate

This is the tax you have to pay and its only for Short term , in long term , you can avail indexation benefits also.

Manish

You said that “the effective tax rate for liquid and money market funds is 28.32%.”
how does this work?
-Is it tax free in the hands of investor(but AMC pays for it from fund profit) ? OR
- Investor has to pay it in yearly tax return ? OR
- AMC pays it ?

also, what is STCG and LTCG for liquid funds

thanks in advance

Kaval

Manish

Nothing gives more than 1 lac of tax exemption , there is no swtiching thing in mutual funds generally , you have to sell one and buy another, in which case there can be exit loads in some mutual funds before 1 yr

Manish

My question is in mutual fund all we know apart from the principal amount whatever amount gained that is tax free in investor’s hand but whatever amount is investing by an investor are they tax free or taxable?