Different Financial Goals

Different Financial Goals

What are financial goals? When an individual make financial plan for self then he/she try to find out what responsibilities in future he/she has to fulfilled. To set the financial goal is very important process of one’s financial planning. It should be practical and achievable.

Although, Indians are good savers but not so smart in investment. Only 4% of household saving comes into stocks and mutual fund. It is because of lack of awareness. Systematic Investment Plan (SIP) route is the best way to achieve your future financial goal. For example if you invest Rs 33,000 per month in equity SIP till 20 years, it would be Rs 5 crore with 15% CAGR. It is a good retirement corpus at the time of you will get retirement. The important factor is time. If you delay 5 year to start a SIP for your retirement, then you have to invest Rs 66,000 (just double from above mentioned Rs 33,000) per month till 15 year to achieve the same Rs 5 crore retirement corpus.

Another important financial goal is child education which is equally important for every person. I will give you a simple example to achieve your child’s education goal. Please start Rs 5,000 every month till 15 year you will get around Rs 30 lakh with 15% CAGR return and if you invest the same amount 5 more years means total 20 year then you get around Rs 66 lakh with the same rate of return.

In general, parents spend more than half of their income on their children’s education and it prove significant burden on their family budget. According to a survey, majority of parents spend on average more than 18-20 lakh for raising a child from 10^th standard to graduation.  

So it would be better if you plan for the same before the time in prudent manner.

There may be many financial goal for a person so make investment separate for each financial goal with the help of financial expert.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Are you first time MF investor?

Are you first time MF investor?

I dedicate today’s blog to my new mutual fund investors. India has less invested in mutual funds if compare with other asset class like fix deposit, real estate, post office saving etc. Although the mutual fund has been the great wealth creator in long run and outperformed to all asset class but still it is not very famous among investors.

Since last 2 years the scenario has been changed, many new investors have started to invest in mutual fund. The problem is many investor do not know the basic of mutual fund schemes and often choose wrong schemes, so now it is more important to educate the investors about mutual fund which is new to these investors. There are many types of mutual funds are available in the market but what is your requirement you should know first.

First of all if you are planning to invest for 1-5 years, never go with pure equity plan. You should go with debt mutual fund or balance plan depend on your time horizon and risk appetite. In debt plan, there are many types of plan which are good for different time horizon investor. So investment time plays vital role to decide the mutual fund scheme.

After deciding the investment time frame, you should also know the expected return, fund’s track record, fund manager and where the fund investing your money. All the information is also available with your adviser and online also. You should know the real rate of return after adjusting taxes and inflation. After all, your investment must beat the inflation at all.

Never go after scheme’s NAV. It does not mean that the lower NAV scheme is better than high NAV scheme. Old schemes often have higher NAV and new investor think it is very costly. It is wrong assumption after all rate of return is important not the current NAV figure. Always choose growth option if you are going for long term investment.

When you plan to invest in mutual fund, please follow the old golden rule that never put all eggs in one basket. It means never invest all money in one particular scheme. You should diversify your portfolio and review it time to time.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

ULIP or Equity MF- Which one better?

ULIP or Equity MF – Which one better?

I have often seen very confused investor for which one is good for investment either ULIP or Equity MF. Both are long term investment product. Investors often lure with the ULIP for very catching word insurance. Whereas equity mutual fund do not offer any insurance but great return as the efficient wealth creator in long term.

Although, Unit-linked insurance plans (ULIP) offers many types of funds from equity to debt segment. If you compare its return over the five year period, it has performed very bad when we compare it with equity fund return.

Recently a very informative financial magazine has done a study about the return of ULIP and equity mutual fund schemes. The Top 10 ULIP funds has given an average anuualised return of 16.61% while mutual fund schemes has delivered an average return of 22.20%. If we compare top 25 ULIP funds and top 25 equity mutual funds, ULIP delivered an average return of 15.28% and MF schemes return has been 20.71% in the same period.

ULIPs published their NAV before adjusting fund management cost and other cost while equity mutual funds published NAV after adjusting all cost. It is the reason investors are not getting right comparison between ULIP and equity MF funds. Returns from ULIP would be more worst after deducting charges like premium allocation charge, mortality charge and other charges. These charges are different for ULIPs managed by various financial entities. Only fund management charge is adjusted in unit price of ULIPs funds. MF schemes unit prices are calculated after deducting all expenses. This makes equity mutual fund return more superior than ULIP funds.

The fund management charge, of around 1.35% may attract investor towards ULIP as it appears lower than expense ratio of equity mutual funds. But when we consider other costs of ULIP- in most cases- it goes up to above 3% in the initial years of investing in ULIP. In an analysis of 237 ULIP funds, more than 50% of ULIP funds underperformed the Sensex over a period of 5 year ended in Feb 2015.

IRDA has put some cap on various charges after 2010. But still the costs of ULIP are much higher than equity MF. If you are looking for good long term investment option with low cost, equity mutual funds are still good choice.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

SIP return beating other instrument..?

SIP return beating other instrument ?

Yes, as I always say that SIP (Systematic Investment Plan) is always good option for investment and create the wealth. You can read today’s Time of India, Mumbai edition on page no. 11 for your belief. Even worst of SIPs would have given you more than your PPF (Public Provident Funds) returns.

Regular investments in mutual fund equity schemes have been rewarding for investors in the last 15 years. Investments in equity schemes done through SIPs have outperformed traditional products such as Tax-saving fixed deposit and PPF.

Tax saving fixed deposits and PPF have returned a little over 9% every year in the last 20 years. Meanwhile, average returns in equity schemes through SIPs- an equivalent of recurring fixed deposits of banks over a 15 years period have been 21.54% every year with the worst performer giving 13.71%.

So I still advise to all of you start a some amount of SIP in equity mutual fund for your 15 -20 years goal like retirement, child education etc. It would be your most prudent investment decision. For more information you can touch with me also.

If you have doubt about investment product and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for conducting seminar in your city, just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

The Magic of Early Investment

Have you started saving in early age?

Whenever I meet around 25-35 age of group and ask about saving and investment, they often don’t have clear view on this subject. For investment they totally depend on family, friends and relatives and friends. Most of them invest in traditional asset class like fix deposit, gold and real estate. Apart of this they even not bother about to know any other asset class. Every asset class has some virtue and drawback and not all asset class always suitable to all person anytime. Before and investment decision you should have proper knowledge about all available options.

I have discussed about many financial products in my earlier posts but today I want to discuss about the advantages of early saving. However, most people start investment after marriage or kids without realizing that they have started late. Here I share one example for understand the early saving concept. 

Two friends - Sachin and Mohit are of same age group of 35 and working in good reputed companies. One day they meet and discuss about family, future and finances. After discussion they were not able to arrive on a definite saving figure which was needed to save for their future. They had contacted their common friend Arvind, a financial planner and met him in his house on one Sunday. Sachin had started SIP of Rs 5,000 every month in a good equity scheme 9 year back when he was 26. Mohit had done the same thing but he has done it 5 year back when he was 30. Now the present value Sachin’s investment is 10.16 lakh whereas Mohit’s current investment value is now 4.19 lakh only. Both had invested same amount in same scheme but the only difference is time. Mohit had started after 4 year from Sachin’s investment and the difference in front of you.

Now they are planning for retirement at the age of 55 after 20 year. If they continue the same amount every month in the same scheme, at the time of retirement Sachin will get from scheme 1.91 (approx 2 Crore) and Mohit will get only 1.12 Crore. The difference in their amount is due to the delay cost of investment mere 4 year only. If Mohit could start with Sachin then he would also get the same amount 1.91 crore.

Now you people will think either these figure is wrong or there are some mistake. It is due to the power of compounding. Regarding ‘power of compounding’ renowned scientist Albert Einstein once said “Compound interest is the eighth wonder of the world. He, who understands it, earns it. He, who does not, pays it.”

Always remember my friends, time is the most important element in any investment. The investment amount does not matter whether it is small or huge. Starting investment in early age make different from those who start invest late.

If you have doubt about the numerical value in this post and want more information regarding investment or you need investment services, feel free to ask us. We also conduct the seminar on investment and financial planning. If you are interested for seminar in your city just drop the mail.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

Do not ignore debt mutual fund..!!!

Are you ignoring debt mutual fund at this moment…??

In these days most of the market expert and economist are very bullish on equity for investment. We are reading the news paper and watching business channel and the majority of people (including expert and common person) express the hope of rosy days. Everyone hope for better days (Achhe Din). I am also not against it. After all UPA govt mess, we the citizen of India have chosen the full majority government and hope for some good action in each front including economy, internal security, defense, foreign policy, social sector etc.

If we analyze, we will find that UPA-2 was worst than UPA-1. Increasing inflation, increasing fiscal deficit, higher interest rate has translated into the poor manufacturing growth, unemployment, and bad shape of economy. The slow decision making on many key issue has added the problem more and our GDP has reduced to almost 4.5% at the end of UPA-2 government.

After September, 2013 the announcement of PM candidate Mr. Narendra Modi from BJP, equity market has shown spectacular performance and it has been continued throughout election campaign till the budget which has presented by the newly elected government. Now the big question is whether this rally would be continued till the next couple of the year in the same manner or not. Mutual fund house, stock broker and equity market participants are still very bullish and positive about the share market performance in the next one or two year.

After analyzing  all the above past events, I have come with some key points for the investors which every investor should keep in mind before investment at the present scenario.

Do not expect or hope and magic from the new government in near term. This government has good intention and capacity to bring the economy on the right track but for this you will have to wait. Keep in your mind, there are no magic stick for economic reform. The government will take time like 2-3 years to repair the economy after that there may be come positive results.

I always say and write in my previous articles that equity investment is the best option for long term investment but for short term it will always volatile. So please do not enter in this market for some short term gain. There is always risk in the market in short term performance.

Do not try to time the equity market, you will lose the money in majority of the time. According to AMFI data, last year in June 2013 there was huge inflow in debt market and the inflow was very poor in equity market. Everyone can see the performances from last June to this June, equity asset class has outperformed to every available asset class. It means majority of speculator and market timer was wrong at the time of last June 2013.

We are seeing the same trend at this moment after the big market rally, now the inflow of fund has increased many folds in equity segment in compare with the inflow of last year at the same period and inflow has reduced surprisingly in the debt mutual funds. Here, you can see the very clear trend that majority of investor only try to time the market and want to make money in the short term.

In my suggestion, stick with your financial plan and keep investing in both assets equity and debt accordingly. Equity will always outperform to all the asset class in the long term. Do not ignore debt asset class at the present scenario. Do your proper asset allocation and avoid overweight towards any asset class particularly equity.

It seems, I should stop at this moment as the article has become lengthy already. We will discuss more in next articles.

If you want more information regarding investment or you have any other query about investment feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

Is Endowment Plan with guaranteed return good for you?

Endowment Plan with Guaranteed return…!!!!

I have discussed in my earlier blogs about endowment policies. In fact these types of policies failed both purpose insurance coverage and return. Neither it provides proper insurance coverage nor gives the good return. I get query about almost on daily basis regarding guaranteed saving insurance plan. We Indian investor always like “guaranteed “ word and often trap with this word. We pay a very high price for this word.

One of my blog reader has asked recently whether he should purchase ICICI prudential guaranteed saving insurance plan. In my opinion, never invest in those product which provide insurance and investment opportunity both. The selling pitch of these products often so attractive that investor do not resist themselves from such type of product.

The realty of these products that it do not give the proper coverage and it also not give the good return. This particular product gives only 5% return on your paid annual premium and provide only 20-25 times insurance cover of your annual premium. If you go with term insurance you can get up to 700 times insurance cover of your annual premium.

For return point of view if you have conservative risk approach and invest in other debt product like debt mutual fund, PPF, bank FD and others the you will get easily return between 8% to 10% return. If you want to lock your money for more than 10 year then equity investment can give you average 15% return. Many mutual fund schemes like ICICI prudential dynamic fund, Birla SL 95 ELSS has given more than 20% return also.

In endowment product 5% return is not good return according to me after 15-20 year investment. In endowment scheme who guarantee the fix return have many types of expenses and hefty agent commission like 15% to 20%. It badly affects your return on investment. Endowment guarantee plans are only beneficial to agents who are selling this product through emotional sales pitch.

I would like to advise all of my reader that they should avoid such type of products and invest in those avenues which are capable to beat the inflation and provide good return also. Liquidity is also the crucial factor at the time investment.

If you want more information regarding investment or you have any other query about investment feel free to ask us.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

www.artofinvest.com

www.arvindtrivedicfp.blogspot.in

Equity Investment : When should be start?

Equity Investment : Is it the right time to invest ?

I have seen the equity market has become more volatile in these days. On 31^st October it was on all time high. But honestly saying, most of the investor has missed all this share market all time high rally. I am getting so many calls from the investor about it and the very common query is that is it the right time to enter the equity market. With my experiences and studies, I can say with very confidence that anytime is good for invest in equity market. You only need discipline, long term view, good research and passion. If you have these mentioned things, share market is your cup of tea.

Most of time, I find the investor and all of those has many reservation about the equity market. They have so many reasons to not invest in equity market. Some of reason like that I had invested some money in ABC mutual fund but not got return, I have bought some shares and lost money, Now market will be go down more after that I will think about equity investment and so more reason.

What I have seen all of those person’s argument that they all have missed something before equity investment. They did not know the time horizon, investment risk and product characteristic. They have trusted blindly someone and hoped that their money would be grow many times fold in very short time span like a gamble and smuggling. I request to all of the investors please keep in your mind that investment in equity is not gambling.

Ask yourself first before any investment whether you are trader or investor. The reality is that most of us enter in the market like trader and want to make some quick money. Somewhere I have read a very interesting fact about the sensex. If you have invested in the sensex on every October over the 22 year period 1991 to 2012. You have invested Rs 2.20 lakh total investment over 22 years and the value of this investment was Rs 8,67,310 on 1^st October. I think it is handsome tax free return of 11.30% for anyone without much burden on pocket stress.

The outcome of this study that long term view, regular investment is the key of equity investment. One more interesting fact that we have witnessed all negative event like global recession, asian financial crisis. Harshad Mehta scam, dotcom bust, Ketan Parekh scam, India Pak Kargil war, 9/11 world trade center attack in US, war in Iraq, 2008 global financial crisis, European debt problem and many more. In spite of these events share market has given above mentioned return.

Right now I don’t know honestly where will be the market go ahead in short or medium term exactly but I know this is the right time to start invest if you have not invested in equity market till date. Many people have negative view on India and many people are very optimistic about the Indian market after 2014 general election. Many big broking house like India Infoline has stopped the retail broking and HSBS has also stopped the equity market operation. In my sense, all of these news are making a good ground for strong bull market but when the time will tell you only..!!!

For more detail about any other query related investment, you can contact me through my email.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Amazing Return from Equity Mutual Fund

Spectacular Return of Reliance Growth Fund

A few days back I have got one mail from Etica Wealth Management Pvt Ltd about one of reliance mutual fund scheme. I am share that same mail with all of you for your knowledge point of view.

Did you know that Rs 1,00,000 invested in Oct 1995 in Reliance Growth Fund has grown to Rs 50,11,800 in Dec 2012. This works out to a whopping 50 times growth in 17 years i.e an annualized return of 25.61% p.a. Doesn't it sound incredible? Which other investment avenue has given such fabulous return consistently over such a long period and that too completely tax-free. Investors generally talk about Real Estate and Gold as the best form of investment but if you look at the past data, equity as an asset class has outperformed both these popular form of investments quite comfortably. Few days back, we saw an article in ET of a flat being sold in Samudra Mahal (one of Mumbai's most iconic residential apartment in Worli at a price of around Rs 1,10,000 per sq ft which sounded almost unbelievable. But if you dig little deeper, you would know that this only works out to a return of around 12-13% p.a over the last 30 years. On the other hand, the BSE Sensex has given an average return of 17% p.a in the similar period which goes completely unnoticed.

But the sad part is, though the fund has generated such meteoric returns, investor never makes such kind of money. Peter Lynch, one of the greatest fund managers of all-time has once said "My fund has made money, but my investors hasn't". He was referring to the performance of Fidelity Magellan fund which has generated a return of 22% p.a since 1963 till the time he was the fund manager, while the investors have hardly made any returns depending on when they entered and exited. Can't believe it? The reason is simple. When the investor makes quick returns in the fund, he withdraws the money too soon thinking that he will put it back when the market comes down which somehow never happens. While in Real Estate / Gold, people just buy and forget it and naturally in the long term, the asset value grows. Whereas, the moment an investor buys a stock or invest in a mutual fund, he will start tracking the value from the next second even though he promises to be a long term investor. And this is the reason, he exits too early. This is called the "ticker effect" i.e he continuously starts tracking the price on CNBC (the moving line which displays stock prices). But in Real Estate because there are no minute by minute price updates, he has no choice but to hold it.

Finally, it is easy to create wealth in the long term, provided we have the patience. Just like Rome was not built in a day, wealth creation will not happen overnight. Stay through the course and you will also be proud of your financial life some day.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Retirement Planning - Its Importance

Have you prepared your retirement plan ?

We all work hard entire life for our daily needs and responsibilities. Our daily essential expenses has become costly day by day and the common man are in trouble to match the income for their current daily life expenses. During this daily life income generation struggle, somehow we are ignoring our after retirement plan. All of us expect a stress free retirement life and for that we need a suitable corpus. This corpus is nothing but replacement of your income when you stop working after retirement. The importance of building retirement corpus you can imagine that even today we are earning and hardly fulfil our needs and when we will stop earning then how can we expect stress free life. Migration of children, weakening joint family system, increased life expectancy, increasing medical bill, increased cost of living are the main factors which forced us to think about retirement planning in very serious.

One more crucial factor is inflation we should consider at the time of making retirement plan. It makes life worse more for retired person. For example if average inflation rate for next 25 year is 8% and our monthly expenses is Rs 15,000. So we need around Rs 1,00,000 per month with the effect of inflation.

Most of young people, at the beginning of their career completely ignore thinking about retirement plan. But please note down retirement is reality for every working person and for comfortable life style after retirement should make planning at the very beginning of the career. In most cases we have roughly 30 years for building the retirement corpus. As age of around 25 the person get job and around 55 take retirement. It means we should invest for some part of our saving for comfortable retired life during our working years.

So now it has become clear that how important to plan for after retirement life. If you find it is difficult to make retirement corpus then contact any independent financial advisor ( IFA).There are many ways to build retirement corpus like SIP in equity mutual fund, regular investment in government sponsored NPS (New Pension Scheme), PPF (Public Provident Fund), Provident Fund for employee, Annuity Schemes etc. We will discuss about these options in upcoming blog.

If you have any query regarding investment please feel free to ask.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Balance Mutual Fund

Balance Mutual Fund: Better investment avenue for beginner

Often first time investors are very much confused for investment in mutual fund. A lot of query came across to me that which mutual fund is good for investment. In this year union budget a new scheme also introduced by government called Rajiv Gandhi Equity Saving Scheme. Now it has also included ETF fund also.  While the details of the proposed scheme are still sketchy, it has caught the attention of non-equity investors. In my opinion there is also a good investment option available for new investor. For beginner, balanced mutual funds are safe option compared with pure equity fund. It is much safer and offer decent return in bad market condition also.

Balance mutual funds that invest both in fixed income instruments and equity to strike a balance between risk and return. In our country usually, such funds invest at least 65 per cent of the corpus in equity, while the rest of corpus is in debt. The allocation to equity and debt may vary across funds depending on the prevailing market condition. For instance, if the fund manager believes that the outlook for the equity markets is bright, he may allocate more resources to it. The onus is on the fund manager, not the investor, to decide on the optimum mix of assets. Balanced fund can provide you with the perfect portfolio diversification without having to invest in multiple funds.

As it do not invest all the money in equity, they are less risky and volatile than pure equity funds. This conservative approach helps balanced funds deliver steady returns to investors across each market scenario.  If you do not have much high risk appetite but still some risk want t o take then you should consider a balanced fund.

If your investment horizon is short to medium term or 3 to 5 year it is ideal investment vehicle to help you meet your critical financial goals and also offer the stable return without worrying about market risk. Investment   through Systematic Investment Plan (SIP) in these schemes will help you to safely build a sizeable corpus over 3-5 years and meet your financial targets in very smooth way. Investing in these funds also give you hassle free portfolio rebalancing automatically.

In the point of view of taxation, the balanced funds that invest at least 65 per cent in equity are treated at par with equity investments and attract no tax liability on capital gains if held for more than a year. The debt-oriented funds come under the debt fund category, where capital gains are taxable.  Therefore it makes sense for you to invest in balanced funds for 3-5 years towards a particular goal, if you are new to the equity market and still want to the benefit of market.

If you have any query regarding investment please feel free to ask.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Mutual Fund Taxation

The awareness of mutual fund is increasing day by day. There are different types of mutual fund available in the market according to risk and time horizon. You can invest in any mutual fund according to your financial goal and risk profile. Often we are confused about tax liability on mutual fund return. However tax rule is subject to the matter of change in every year depends upon budget of Govt of India. We are here trying to find out tax liability of mutual fund return for financial year 2012-13.
We can divide mutual fund into 2 parts for taxation point of view. One is dividend paying mutual fund and the other is non dividend paying mutual fund. So first we talk about tax implication on dividend received by mutual fund unitholder.


Tax for Dividend paying Equity Mutual Fund:
The dividend received in hand of unitholder is completely tax free. It is also tax free to the mutual fund distribution house. It means the fund house also not liable to any tax on distribution income or dividend. So in equity mutual fund dividend is tax free for unitholder and fund house both.


Now we move on towards capital gain. If we make profit and hold unit more than 12 month we have to pay Long Term Capital Gain Tax and if we hold less than 12 month (make profit) we are liable to pay Short Term Capital gain Tax.


Capital Gain for Equity Mutual Fund:
In equity oriented schemes there are no long term capital gain tax at all for all categories investor.
The Short term capital gain is different for different category investor. For individual / HUF , domestic company and NRI it is (15%+ 3% cess)15.450%, If domestic company income more than 1 Crore (subject to marginal relief)  then it is ( 15% + 5% surcharge + 3%) 16.223.


DDT for Debt Mutual Fund:
However, dividend received in hand of unitholder is completely tax free in the debt mutual fund also. But this is taxable to the mutual fund distribution house. The fund house have to pay DDT (Dividend Distribution Tax) on distribution income. It means the investor will get dividend in their hands after DDT paid by the fund house.
For individual/ HUF and NRI, DDT are (12.5% + 5% Surcharge + 3% Cess) 13.519%. For domestic company it is (30% + 5% Surcharge + 3% Cess) 32.445%.


DDT for Money Market and Liquid Mutual Fund
There are also one more category in debt mutual fund. These schemes are also same as debt mutual fund. For the purpose of DDT it has been maintained separately here.  For individual/ HUF and NRI, DDT are (25% + 5%Surcharge + 3%Cess) 27.038%. For domestic company it is (30% + 5% Surcharge + 3% Cess) 32.445%.

Capital Gain for Debt Mutual Fund:
For all type of debt mutual fund, the unit holder can pay long term capital gain tax with indexation or without indexation whichever is lower. For individual / HUF, domestic company and NRI it is (10% + 3% Cess) 10.300% without indexation and (20% + 3%Cess) 20.600% with indexation.
If domestic company, income more than 1 Crore (subject to marginal relief) then long term capital gain without indexation (10% + 5% Surcharge + 3% Cess)10.815% and with indexation (20% + 5% Surcharge + 3% Cess) 21.630%.
The short term capital gain tax levied on individual / HUF, and NRI depend on their respective income tax slab. For example, if anyone in 30% income tax slab then short term capital gain tax would be (30% + 3% Cess) 30.900%. For domestic company it would be 30.900% and if domestic company income more than 1 Crore (subject to marginal relief) then it is (30% + 5%Surcharge + 3% Cess) 32.445%.

Note that short term/long term capital gain tax will be deducted at the time of redemption of units in case of NRI investors. Securities transaction tax (STT) will be deducted on equity funds at the time of redemption and switch to the other schemes. Mutual Fund would also pay securities transaction tax wherever applicable on the securities bought / sold

If you have any query about mutual fund taxation related please feel free to ask.

Regards,

Arvind Trivedi

Certified Financial Planner
arvind.trivedi79@gmail.com