Understanding Taxation of Mutual Funds

Abstract

Investment is defined as the commitment/sacrifice of resources at present by postponing current consumption and deploying them in some asset classes for a time with an expectation of achieving possibly a larger consumption basket or wealth in future. Mutual funds are collective investment vehicles where the fund house pools the savings from a large number of investors, small and big, based on the investment objectives of each fund or scheme. The pooled funds are then invested by the fund manager across different asset classes of equity, debt and cash depending on asset allocation mandate of the fund.