Taxation in mutual funds play a vital role. Both equity and debt funds are taxed differently. While there is no long-term capital gain tax on equity funds after one year, for short term too the segment is taxed by 15%. For debt mutual fund schemes there is 20% long-term capital gain tax and a maximum of 30% short term capital gain tax (resident individuals & HUF). Very strategically schemes are framed today to ensure that investors benefit from the taxation perspective. Balanced funds today are having an average exposure of 65% to equities. These funds are taxed like equity funds whereas promoted as “less-risky” funds. But, are the Indian balanced mutual funds really enough balanced? With around 65% investing in equity, these funds are essentially equity funds that expose your money to almost the same amount of risk that any normal equity fund does. Rather, balanced funds in India have spread their 65% of equity exposure in large/mid/small cap and even micro-cap space. While this gives the fund manager the liberty to choose stocks that could usher in more risk to your portfolio. The mid-cap to micro-cap range is too risky for a conservative investor who intends to balance out the risk in his portfolio.
75 years to reach per capita income of $2730, will take only 5 years to add another $2000, FM Sitharaman
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