The mutual fund is a mechanism of pooling money from the general public or investors and investing it in hybrid instruments namely debt, equity, gold ETF, and gold funds. Furthermore, you can invest funds in pure debt, purely equity, or various combinations of these. Mutual Funds are bought and sold in FIFO and that is how the trade entries are reflected in the Mutual Fund Statement. Similar to equity shares having a price, mutual funds have a NAV (Net asset value). Read about the types of mutual funds in India and the benefits of investing in mutual funds.
Yes. FY 2020-21 onwards, the government abolished DDT (Dividend Distribution Tax). As a result, dividend income which was earlier exempt is now taxable. Further, the payer must deduct TDS under Sec 194K at 10% on dividends paid on Mutual Funds in excess of Rs. 5000.
Yes, Equity linked savings scheme or ELSS mutual funds are eligible for exemption u/s 80C. Deductions can be availed up to Rs. 1.5 Lakh per year. However, no deductions u/s 80C are available to taxpayers who have opted for the new regime.
ELSS i.e. Equity Linked Saving Scheme just like all tax-saving investments comes with a lock-in period. They, however, have the lowest lock-in period of 3 years. Thus, the investor cannot withdraw money from the ELSS Scheme for a period of 3 years.