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1. Mr. Shah invested in a mutual fund with his own funds. His son who is a NRI also made identical investment in the same fund at the same time. Which of the following statements is true in respect of their investments?

Different tax rules will apply to income received by Mr. Shah and his son

Mr. Shah's son will have higher return on investment compared Mr. Shah's investment.

NAV for Mr. Shah and his son will be different

2. A mutual fund is considered as a ____________ structure for the purpose of taxation.

pass book

Pass through

pass back

3. Which of the following statements is true with respect to taxation of mutual funds?

Income from investments is taxed in the hands of the mutual fund

Income earned by an investor from a mutual fund is exempt from tax.

Income earned by a mutual fund is exempt from tax.

4. Arun invests in the growth option of XYZ Equity Fund. In which form will he receive income from his investments?

Dividend

Capital appreciation

Interest

Why are mutual funds efficient for saving taxes?

tax aspects of a mutual fund

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Level - 6,3,8,6 BASIC

Mutual funds offer dividend and growth options as alternate ways to receive income. Watch this investor education video by Moneykraft to understand how the final tax liability of an investor on his mutual fund income depends on his specific tax status as well as the option selected.

AUTHOR(s):Uma Shashikant

Why are mutual funds efficient for saving taxes?

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