Key Points on Mutual Fund Taxation in India

• Equity Funds: STCG at 15%, LTCG over INR 1 lakh at 10%.
• Debt Funds: STCG per slab, LTCG at 20% with indexation.
• Dividends: Taxed per slab, TDS at 10% if over INR 5,000.
• ELSS Funds: Section 80C benefits, LTCG over INR 1 lakh at 10%.
• Hybrid Funds: Taxation based on equity exposure; follows equity or debt rules.

One of the key benefits that attract many investors in India is the various tax benefits associated with mutual fund investments. Understanding these tax advantages can help you make more informed decisions and optimize your investment strategy. Here are some key tax benefits of investing in mutual funds in India:

• Section 80C Deduction: ELSS investments offer up to ₹1.5 lakh tax deduction annually.
• Dividend Taxation: Taxed per investor's slab; equity dividends tax-free up to ₹10 lakh.
• Capital Gains: LTCG tax-free up to ₹1 lakh annually; 10% tax above this.
• Tax-Free Switch: Switch within the same fund house without tax liability.
• SIP Benefits: ELSS SIPs enjoy Section 80C benefits; each installment treated as new investment.

• Historical Returns: Examine annual returns over 1, 3, 5, and 10 years for consistency and performance trends.
• Benchmark Comparison: Compare fund performance to its benchmark index to gauge relative success.
• Risk-Adjusted Returns: Use Sharpe and Sortino Ratios to assess returns relative to the risk taken.
• Expense Ratio: Evaluate annual fees as a percentage of assets; lower ratios often mean better net returns.
• Fund Manager's Track Record: Check the manager’s experience and consistency across different market cycles.