tata divident yield mutual fund…tax on gains

POSTED BY Aseef ON February 28, 2012 10:01 am COMMENTS (11)

Even though tata divident yield mutual fund’s current equity allocation is 96%,stated allocation range is mentioned as 0-100% for equity and 0-100% for cash/cash equity.
So ,is the LTCG from this fund taxable like debt funds.?
Also HDFC prudence’s equity allocation stated range is 40-75% for equity and 25-60% for debt and cash.
I asked the agent about it,but he is not very clear about the tax part.
Please advise on how these fund gains are taxed because equity allocation can go below 65% as per stated range?

11 replies on this article “tata divident yield mutual fund…tax on gains”

  1. manoj.gupta says:

    I am looking for long term investment wherein i can get guaranteed return (9- 10%).
    My salary come in 30% tax bracket so i am also concern with LTCG. so which is the best investment for guaranteed return with minimum/zero LTCG. I am sorry if this question is already cover somewhere in your site, i could not find it. so please give me the link.

    1) Fixed Deposit, which fall in LTCG!!
    2) PPF , does it also fall in LTCG?
    3) Pension plan/wealth plan insurance scheme like ICCIPru wealth plan, Aviva Dhan vradhi, Lic Pension plan etc, is there LTCG for these products also?

    1. Ramesh says:

      Guaranteed actual return @ 9-10% are not available (Some FDs are there, but they attract tax).

      Even PPF is not guaranteed anymore (they change the amount of interest each year, which is linked to long-term G-sec rates).
      So, please search more and increase your knowledge.

      All your Pension and wealth plans again DO NOT come with any guaranteed returns. Do read the offer documents yourself. Do not get duped by hollow promises.
      (On cursory look, you are a ripe candidate for all those **** schemes, sorry).


    2. Dear Manoj, may I know your other details? Like your age? family size, no. of dependents, current assets & investments, loan liabilities, …………….?



      1. manoj.gupta says:

        Age 35, kid:1, 2k in mutual fund pet month, home loan 35L

        1. Dear Manoj, for a salary in excess of 10L, loan liability of 35L Rs. & family related liabilities, what is the situation of your life insurance?



          1. manoj.gupta says:

            For life insurance i am thinking for term insurance though i have life insurance against my home loan but this i am thinking to close by transferring loan to diff bank.
            So basically i am planning to do 2-thing soon, term insurance and investment in guaranteed return with no LTCG ( if possible). Please suggest!!

          2. Dear Manoj, If I give you a guarantee of generating 7% returns, year on years but the inflation in the country is running 10% or more, is the guarantee meaningful to you?

            Regarding that Term plan thing, first of all purchase a term cover of at least 12-15 times multiple of your yly income + home loan.



  2. aseefth@rediffmail.com says:

    thanks so much ,Ashal,Banyan FA

  3. Dear Aseefth, The fund manager knows very well that 65% cut off mark for Eq. allocation to be eligible for zero tax status for LTCG. So for the funds mentioned by you, the normal Eq. exposure ‘ll remain above 65%.

    there is one practical aspect for your query – Whenever you are redeeming from these funds, just check for last 13 months holdings & if the Eq. exposure remains more than 65%, you are eligible for zero LTCG Tax.



  4. BanyanFA says:

    These funds are categorised as Balanced / Equity Funds. Such funds would not attract LTCG (unlike Debt Funds) as they would generally invest more than 65% of their holdings into Equity. A fund can generally shuffle its portfolio and in doing such park its funds in debt products. However, it strives to meet the 65% requirement to comply with Tax Norms.


    1. SREEKANTH says:

      Dear all, i have invested 20k in MF SIPs.
      5k on HDFC Children gift fund
      2 units per moth 5.8k on Gold bees
      2.5k each on idfc premier equity, icici prudential, birla sunlife front line equity,dws agricultureal fund.

      please advise it is ok
      iam 39 year old working for MNC.

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