Bank fixed deposits (FDs) give only 7-8 per cent nowadays. TDS is also applicable on interest. TDS won't be applicable if I invest in ultra short term schemes. Please clarify.
- Sanjay
There is no TDS (Tax Deducted at Source) on ultra short term schemes. However, you will have to pay capital gains tax on your returns from debt mutual fund schemes. If investments are sold before three years, the short-term capital gains are added to the income and taxed as per the Income Tax slab applicable to the investor. If investments are sold after three years, it will qualify for long-term capital gains tax of 20 per cent with indexation benefit.
This article was originally published on December 11, 2015.
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