Any body can invest money in various mutual funds schemes available in the market. The following points have been clarified to understand the mutual funds schemes in better way:-
Q. What is Mutual Fund Scheme?
Ans. When funds are raised by public issue for a specific period by public banks, financial institutions and others private sectors then it is called Mutual Fund Scheme.
Q. How many types of schemes are available under Mutual Fund Scheme?
Ans. Three types of schemes are available under Mutual Fund Scheme as under:-
- Regular Income Scheme under which the investors get regular income from time to time.
- Deferred Income Schemes with capital appreciation with or without bonus payable on the maturity.
- Tax Saving Schemes for the purpose of saving of Income Tax
Q. Who can apply for investment in Mutual Funds?
Ans. Any individual, Hindu Undivided Family, Companies, Partnership Firms, Bodies Corporates, registered in India and Trusts etc. can apply for units in Mutual Fund Scheme.
Q Can the units of mutual funds, be transferred to another person?
Ans. Yes, the units are easily transferable to another person by filling a transfer form.
Q. What are the Tax Benefit of investment in Mutual Funds?
Ans. Following are the tax benefits if the investment is made in Mutual Funds:-
- No long term capital gain on the profit on sale of equity oriented mutual funds.
- investment in certain specified LIC Mutual Funds is eligible for deduction under section 80-C.
- Investment in Pension Fund of specified mutual funds are legible for deduction under section 80-C.
- Investment in Equity Linked Saving Scheme of UTI and other Mutual Funds are eligible for deduction under section 80-C.
- Investment in units of a mutual fund that invests the amount of subscription in eligible issues of capital, are eligible for deduction under section 80-C.
- From financial year 2003-04 (Assessment Year 2004-05) onwards, dividend from mutual funds is fully exempt.
Q. Is Tax is deducted at source (TDS) on the income from mutual funds?
Ans. No. Since the income from mutual funds is fully exempt then the question of deduction of tax at source does not arise at all.
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