Taxation Rules on Mid Cap Mutual Funds
Basically, taxation rules of Mid cap Mutual funds are different in different companies, so we see the taxation rules of Mid Cap Mutual Funds in India:
Mid cap mutual funds are based on dividend distribution tax and capital gains tax, here are the rules:
Capital Gains Tax
Basically, there are two types of taxes implemented on money earned by Mid cap mutual funds, it depends on the time period.
- Short-Term Capital Gains (STCG): When Mid cap Mutual funds shares are sold before 1 year, then a 15% tax will be implemented on the total profits.
- Long-Term Capital Gains (LTCG): When the shares are sold after a period of one year, then there is no tax on up to one lakh rupees, more than one lakh is taxed at 10%.
Dividend Distribution Tax (DDT)
- Qualified Dividends: Some dividends received from Mid-cap Mutual Funds may qualify for the lower tax rates applicable to qualified dividends. The tax rates for qualified dividends are the same as those for long-term capital gains (0%, 15%, or 20%, depending on your taxable income).
- Non-Qualified Dividends: Dividends that do not meet the criteria for qualified dividends are considered non-qualified dividends, and are taxed at your ordinary income tax rates.