Taxation on Mutual Fund Returns : After a long period of decline, the Indian stock market is now showing signs of good recovery. However, compared to other global markets, the performance of the Indian market has been relatively weak this year. Still, experts believe that the Indian market is likely to see an uptrend soon. The volatility in the market has directly affected investors’ mutual fund portfolios as well. But long-term investors are not very worried about this.
In this article, we will understand how much tax you need to pay if you invest in a mutual fund SIP in your wife’s name.
Men Investing in SIPs in Their Wife’s Name
In the last few years, the number of people investing in mutual funds has increased rapidly. A major portion of these investors includes small investors and women. Many working women actively invest in mutual funds.
Additionally, many salaried and self-employed men also prefer to invest in mutual fund SIPs in their wife’s name. If you are also planning to invest through SIP under your wife’s name, it is important to clearly understand the applicable tax rules.
How Much Tax Do You Pay If You Invest in SIP Through Your Wife’s Name?
The returns earned from mutual fund SIPs are subject to capital gains tax. Capital gains tax is classified into two types:
1. Short-Term Capital Gains (STCG) Tax
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If you sell your equity mutual fund units within 1 year,
you must pay 20% STCG tax.
2. Long-Term Capital Gains (LTCG) Tax
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If you redeem your equity mutual fund units after 1 year,
you must pay 12.5% LTCG tax.
Taxation on Debt Funds
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For debt mutual funds, the tax is charged as per your income tax slab rate.
Same Tax Rules for Men and Women
Tax rules remain the same for both men and women.
This means that even if you invest in a SIP in your wife’s name, the tax applicable will be the same as for any other individual investor.
