Suppose if I have invested in SIP in Mutual Fund what is tax treatment for it?

suppose I invest Rs. 500/- P.M. in SIP of any MF in growth option from June 2007 to May 2008 (for 12 Months). While I will file ITR for A.Y. 2008-09 what will be the tax treatment for it

Only ELSS funds qualify for tax deduction u/s 80c

good luck
pnkmurthy@yahoo.com

dear friend,
if u have invested in growth option then any unit has to be held for 1 year to get out of short term capital gains tax...which means you can sell only those units purchased one year ago in SIP..... any dividend accrued is tax free.....in case you sell units after one year they will be treated as long term capital gains & taxed under same rules.

however i suggest you give exact details to your CA & get his opinion

You can claim for the deduction of the same from your taxable income u/s 80C for Rs.5000 (June - March), subject to the particular fund states that investments qualify for deduction u/s 80C. You can check for the same with your MF Agent.

Usually Close-ended funds are eligible for deduction and Open ended funds are not eligible as they do not have a lock-in period.

Regards,
Suresh

Mr. Puneet,

there is provision under income-tax act. Under section 80C, you will get deduction from gross total income amounting to actual investment during the year or Rs. 100000/- whichever is less, provided the MF is equity-oriented MF.

regards
Nayan

If ur investment is in ELSS plans that mutual funds offer then you can claim tax exemption under section 80C upto 1lakh investment.
This investment will be locked in for 3 years.

If the investment is in Non ELSS funds then there is no tax exemption under section 80C.

If you redeem (Sell) your accumulated units before 1 year of investment than u have to pay 10% Income Tax on te capital Gain
After 1 year If you sell there is no tax on the earnings.

All divident earned is tax free
Happy investing