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Tax Benefits
Tax rates applicable from 1st April 2007
Nature of Income Resident
individuals
Corporates Non-resident
Capital gains tax rates*
Short term
Equity schemes 10% 10% 10%
Debt schemes 30% 30% 30% for individuals and FIIs / 40% for Foreign company
Long term
Equity schemes Nil Nil Nil
Debt schemes 10% without indexation or 20% with indexation 10% without indexation or 20% with indexation 10% for FIIs / 20% others (Indexation benefit is not available to non-resident)
Dividend
Equity schemes Tax free Tax free Tax free
Debt schemes Tax free Tax free Tax free

*Plus applicable surcharge and education cess

Short capital losses can be set off against short term and long term capital gains, whereas Long term capital gains can be set off against the long term capital gains. Remaining unutilized losses can be carried forward for 8 years from the year in which such losses were incurred.

Withholding tax rates
In case of Non-resident investors (other than FIIs), the short term / long term capital gain tax will be deducted at following rates plus applicable surcharge and education cess, at the time of redemption of units.
Assessee Status Short Term
Withholding tax rate
Long Term
Withholding tax rate
Non-residents
- Company 40% 20%
- Other than companies 30% 20%

Non-resident Unit Holder can avail the benefit of Double Taxation Avoidance Agreement (DTAA) in force with his country of residence, and income tax / withholding tax will be applicable at the rate provided in the Act or at the rate provided in DTAA, whichever is more beneficial to him.

However, in order to obtain the benefit of the lower rate under the DTAA, the Unit Holder would be required to provide a certificate from his Income tax officer stating the eligibility of the investor to claim such benefit.

Securities Transaction Tax @ 0.25% will be deducted from equity schemes at the time of redemption or switch to the other schemes.

Surcharge and Education cess
Status Rate of surcharge
Resident individual / companies 10%
Non resident
- Companies 2.5%
- Other than Companies 10%
An Education Cess of 2% and Higher Secondary Education Cess of 1% is levied on tax plus surcharge payable by all assesses.

Dividend Distribution Tax

As per section 115R of the Act, Mutual fund is liable to pay Dividend Distribution tax at following rates on the income distributions:

Type of schemes DDT rate applicable
Equity oriented schemes* Exempt
Money market / liquid schemes 28.325%**

* Equity oriented schemes means schemes where 65% or more of the investible funds are invested in equity shares of domestic companies.
** Above rates are inclusive of Surcharge and Education cess.

Disclaimer

The above information is provided for general information purposes only and applies to the scheme. In view of the individual nature of tax benefits, each investor is advised to consult his or her own tax consultant with respect to the specific tax implications arising out of his or her participation in the scheme.

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