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Taxation On MIPs

For the purpose of taxation, monthly income plans are treated as debt funds…

Are the returns of MIPs taxable? At what rate are they taxed?
Rajeev Talwar

A monthly income plan is a debt oriented mutual fund which regularly pays out dividends to create an income stream. These are taxed the way debt funds are taxed. So, any profit before a year would be short term capital gains and will be added to your income and taxed at your income tax slab rate.

Any profit you get after one year in the MIP will be taxed at 10 per cent without indexation or 20 per cent with indexation, whichever is lower. And all the dividends received from the MIP will be tax-free in your hands; however the AMC pays out dividend distribution tax.

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