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Taxes and pension fund asset allocation

October 22 , 2020 |4 Comments

6 Taxation For Asset Allocation Funds

Asset allocation funds are subject to taxation as debt funds as most of these funds are Fund of Funds. As per the investor’s tax slab, the short-term gains from debt funds are incorporated into the income and taxed accordingly. There is a 20 percent taxation (adjusting the purchase price for inflation) with indexation, for long-term gains of 3 years and over. This lowers the tax burden due to lowered capital gains.

As far as taxation is concerned, Multi Asset funds are known to be the best mutual funds. Short-term capital gains (STCG) are combined with income and taxed. On the other hand, long-term capital gains (LTCG) are taxed at 10% (with indexation benefits) and 20% (without indexation benefits).

Like other mutual funds, asset allocation funds are also subjected to taxation. For these funds, the taxation is similar to that of debt funds, as the majority of them are Funds of Funds. The short-term gains earned on these funds are included in the income and then taxed in accordance with the investor’s tax slab. For long-term gains of over three years, tax is levied at the rate of 20% with indexation. One should also remember that the tax structure for bonds, debt mutual funds and fixed deposits are not the same. Investors need to be familiar with the different tax structures of both debt and equity class to be able to chalk out a portfolio and balancing

its taxes effectively.

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Asset Allocation For Dsp Tax Saver Fund

Taxes And Pension Fund Asset Allocation

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Asset Allocation Funds Types Benefits And Taxation

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