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Reopening of IDFC Premier Equity Fund (w.e.f March 1, 2012)

Notice is hereby given that units of IDFC Premier Equity Fund (IDFC PEF), shall be available for subscription w.e.f. March 1, 2012, Units will be available at the Applicable NAV. 

Tax Implications on mutual Fund Gains..

Long term capital gains

If a fund is purchased and kept for over one year, then it is referred to as a long-term investment, and gains or losses made on it are referred to as long-term capital gains or losses, respectively.

 1 STT @ 0.25% will be deducted on equity funds at the time of redemption and switch to the other schemes
2 For foreign corporates, the rate applicable would be 40% + 2% surcharge + 3% cess i.e. 42.024%
3 The short term/long term capital gain tax will be deducted at the time of redemption of units in case of non-resident investors only
The rates that will be applied by the AMC at the time of redemption would be as follows

Also refer Tax treatment of Gold ETF funds and Gold Savings Fund (FOF)

Short Term Capital Gains

 If a fund is purchased and kept for less than one year, means  if an investment has been held for less than a year, then it is referred to as a short-term investment. The gains or losses made on such an investment are also referred to as short-term capital gains or losses, respectively.

Dividend in Kotak 50 (Record date: Feb 29, 2012)

Kotak 50 is an open-ended equity scheme. Investment Objective: The investment objective of the Scheme is to generate capital appreciation from a portfolio of predominantly equity and equity related securities. The portfolio will generally comprise of equity & equity related instruments of around 50 companies which may go upto 59 companies but will not exceed 59 at any point in time. General Risks: - Mutual Fund and securities investments are subject to market risks. There is no assurance that the Scheme's objective will be achieved. NAV of the Scheme's Units can go up / down depending on factors and forces affecting securities markets. Past performance of Sponsor / AMC / Fund does not indicate the scheme's future performance. Kotak 50 is only the name of the scheme and does not in any manner indicate either the quality of the scheme, futur e prospects and returns. Statutory details: Kotak Mahindra Mutual Fund is a Trust (Indian Trust Act, 1882); Investment Manager: Kotak Mahindra Asset Management Company Ltd.; Sponsor: Kotak Mahindra Bank Ltd. (Liability Rs. Nil); Trustee: Kotak Mahindra Trustee Company Ltd. Please read the Scheme Information Document (SID) and Statement of Additional Information (SAI) carefully before investing. SID and SAI available on

Dividend in HDFC BALANCED FUND & HDFC TAXSAVER (record date March 01, 2012)

Source: HDFC Mutual fund website
Source Link
 Source Link

Dividend in IDFC Classic Equity Fund (record date: February 27, 2012)

IDFC Mutual Fund has announced dividend in IDFC Classic Equity Fund.   The record date for dividend declaration is February 27, 2012 The quantum of dividend will be1.20 per unit on the face value of Rs 10 per unit.

IDFC Classic Equity Fund is an open ended scheme whichoffers you a portfolio whose core is invested in fundamentally strong companies that may or may not be in current market favour. The remainder of the portfolio is invested in companies / sectors that attempt to capture an oncoming market bias ahead of the market rally.

Dividend declaration under Equity mutual Funds in India (period from Dec 2011 to March 2012)

How to get the ISIN Number of mutual fund scheme in India???

ISIN mean  International Security Identification Number.
Each mutual fund is assigned an ISIN ( International Security Identification Number). It can be obtained from amfi, NSDL or CSDL and has to be included in the CRF/DRF.

Target Investment Plan (TIP)?

Target Investment Plan (TIP) is an innovative  investment strategy that works similar to a Systematic Investment Plan (SIP) in terms of a regular periodic investment, but differs in the amount invested in each installment.
The SIP is same amount every month, while in the TIP, the amount is different in each instalment.

This facility was first started by ICICI Securities in month of October 2011, The TIP is all about a goal-oriented approach to investing in mutual funds on its online broking platform, ICICIdirect.

You can start your TIP by setting a Target amount and expected rate of return over a period of time. The TIP is a goal-based investment approach where the investor can customise his investment according to his goal.

The monthly contribution in the TIP is determined by the current portfolio performance and the prevailing market conditions.

In TIP you start by setting a target amount and an expected growth rate over the period of achieving the target. The longer the period the better is the opportunity to achieve the desired target amount.

Registration of multiple bank accounts in mutual funds in India...

As per AMFI circular related to registration of multiple banks all Mutual Funds are directed to provide a facility to the investors for the registration of multiple bank accounts where they are one of the holders and from where they expect to make a payment for a Mutual Fund subscription.

The multiple bank account registration has the following 3 steps.
A) Registration of multiple bank accounts
B) Registration of default bank account
C) Deletion of a registered bank account

A) Registration of multiple bank accounts
As per AMFI circular
A separate form called ‘Multiple Bank Accounts Registration Form’, has been designed for investors covering requests for:
- Addition of bank accounts
- Registration of Default Bank account and
- Bank Account Deletion

Investors shall use the ‘Multiple Bank Accounts Registration Form’ along with any one of the following documents to register bank accounts:
- Cancelled cheque leaf
- Bank statement
- Passbook page with account number, name & address


Note: If investors submit copy of any one of the above documents, investors should bring the original documents to the AMC Branches/Collection Centers for verification. Originals would be returned back to investors after verification.

The bank accounts registration will be done only after verifying that the first named unit holder in the folio or account is one of the bank account holders

B) Registration of default bank account

Investors shall specify one of the registered bank accounts with as “Default bank account” for credit of redemption and dividend proceeds. For this purpose, investors shall use the above mentioned ‘Multiple Bank Accounts Registration Form’.

Investors also have the option of choosing to receive the redemption proceeds in any of the other registered banks at the time of redemption. This means, investors have to specify the bank account (in the redemption request) in which they would like to receive the redemption proceeds

In case of existing investors, the existing bank mandate will be treated as default bank account till the investor gives a separate request to change the same to any of the other registered bank account(s).

In case of new investors, the bank account mentioned in the purchase application form used for opening the folio, will be treated as the default bank account until the investor gives a separate request to change the same to any of the other registered bank account(s).

C) Deletion of a registered bank accountThe investors shall use the above mentioned ‘Multiple Bank Accounts Registration Form’ to delete a registered bank account. Investors will not be allowed to delete a default bank account unless he/she registers another registered bank account as default account.

Forms - 
Multiple Bank Accounts Registration Form

1. Birla Mutual Fund
2. HDFC Mutual Fund

3. Reliance Mutual Fund
4. Kotak Mutual Fund

5. DSPBR Mutual Fund
6.Franklin Templeton Investments
7. Principal Mutual Fund


Impact of Direct Tax Code on ELSS Funds

 After New DTC becomes effective from 01 April 2012, will the dividend in an ELSS scheme be tax-free? What is the status of investments current and future in equity funds and ELSS schemes as per the new DTC?

The Direct Tax Code (DTC) is still a draft version and while it is expected to be in force from April 2012, there could still be some changes. Hence, what we are interpreting today could change especially with respect to the tax treatment of equity-oriented schemes in general and tax savings schemes of mutual funds specifically.

The tax savings schemes of mutual funds will cease to be eligible investments for deduction under section 80C from April 2011 as per the new proposals. Any investments made after that date will not have any tax deduction benefits.

For investments already made in these schemes, the benefit of tax deduction already availed of will stay, as will the locked-in status of the investment for three years.

Dividends received from all equity-oriented funds, including tax schemes, will continue to be tax-free in the hands of the investor. However, the DTC proposes a 5% distribution tax on income distributed by the mutual fund which will be paid by the fund.

Investors will continue to have the benefit of not paying any tax on long-term capital gains from equity oriented funds. For short-term capital gains, a deduction of 50% of the gains will be allowed. The net income after deduction will be taxed at the normal rates applicable to the investor.

Update: (April 1, 2012) ELSS option still available for financial year 2012-13

It said ELSS is not eligible for tax benefits under the DTC, but since the implementation of the new tax regime has been postponed, investors can park their funds in ELSS schemes of mutual funds

Union Finance Minister Pranab Mukherjee on Saturday (march 31, 2012) said that the long-awaited Direct Tax Code (DTC) would be rolled out from next year.

Union Finance Minister Pranab Mukherjee said

“Next year, I will introduce the DTC fully after examining the recommendations of the parliamentary standing committee. The recommendations of the parliamentary standing committee were available to me on March 9,”

Whether dividend re-investment in a Tax Saver fund also subject to a lock-in period of 3 years?

The answer is Yes.
 Any investment made into an Equity Linked Saving Scheme (ELSS) is subject to a lock-in period of 3 years. This holds good even for dividends from ELSS which is re-invested if the investor has chosen the dividend re-investment option.

The implication for the investor is that some portion of his investment will always be locked-in because dividend declared is re-invested and will attract a three year lock-in. However, any portion of the investment, whether originally made or as a result of dividend re-invested, which has completed the lock-in period of three years, can be redeemed by the investor.

So in such situation in order to avoid lock in period of 3 years in dividend which is reinvested, best is switch to dividend payout option.


IDFC Infrastructure Bonds (January 11, 2012 to February 25, 2012)

Investment upto 20,000 in IDFC Infrastructure Bonds - Tranche 2 will be eligible for exemption under section 80CCF of the Income Tax Act, 1961. Interest rate under both the options is 8.7% per annum.

Loan against mutual fund units

1.Banks and non-banking financial companies provide loans against mutual fund units. An application has to be filed by all joint holders of the mutual fund folio to seek such a loan.

2. Loans are provided at rates lower than those for unsecured personal loans. The lender will ask for a lien to be marked on the units, which will be lifted when the loan is repaid.

3. A lien is marked by the lender when he notifies the registrar or the asset management company. A lien can be marked on all or part of the units held in a folio.

4. The amount of loan that is sanctioned is a percentage of the value of units held in the folio on the date of giving the loan. In the case of equity funds, the margin can be higher (50%).

5. The dividends can continue to be paid to the holder of units even during the period of the lien. However, no units can be redeemed before the loan is repaid.

6. If there is a default on the loan, the lender can invoke the lien and ask for the units to be redeemed. The proceeds will be paid to the lender.

The content on this page is courtesy Centre for Investment Education and Learning (CIEL).

Sundaram Select small Cap Fund is maturing on February 22, 2012

Sundaram Select Smallcap, a 5-year close ended fund matures on 22.02.2012

The Amc sent letter(switching transaction slip) to all units holder if they want they can switch to Sundaram Tax Saver, an open end ELSS Fund, the last date to submit is Feb 16, 2012.

And the investor who not opted for switch in such case units got redeemed and amount will be transfered to investor's bank account registered in that scheme.

Basic things required for investment in mutual funds in India


Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all investments, they also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions.

Basic information about mutual funds

Mutual funds allow a group of investors to pool their money together and taste a broader range of stocks or bonds than they could if they were trying them on their own. A mutual fund is an Investment vehicle that collects money from  various investor with similar financial goals. Investing wisely makes your money grow, helping you to meet your financial needs.

The money invested in mutual fund is utilized by a fund manager to purchase and trade in stocks (shares/equity) bonds(debt) and other securities as stated in the investment object of that scheme

The main benefits of investing in mutual funds

1. Easy to buy and sell
2. Investments can be made in lump sum or periodic payments
3. Mutual fund industry in India is very well regulated and transparent
4. Professional management saves time and costs.
5. Diversification helps to protect from downside risk
6. Rupee cost averaging helps profit from small regular investments

What things you require to start investing in mutual funds:

1. Permanent Account Number

 Permanent Account Number (PAN) is unique alphanumeric combination issued to all juristic entities identifiable under the Indian Income Tax Act 1961. It is issued by the Indian Income Tax Department under the supervision of the Central Board for Direct Taxes (CBDT) and is almost equivalent to a national identification number. It also serves as an important ID proof.
First things  make sure you have a PAN (Permanent Account Number) ; it's mandatory.
If not so first apply for Pan number,

Procedure for obtaining Permanent Account Number (Pan card)

2. KYC compliance
Make sure you get yourself  KYC compliant,how to do that follow this process

(If you are not kyc compliant, but you have pan number and also have relavant documents like proof of identity and proof of residance you can still go ahead with your mutual fund investment, but this time you have to submit your application form and Kyc form together to get started)

KYC requirements for a Mutual Fund Investor?

3. Bank account in your name

Bank account is must if you want to start investing in mutual funds.
 The investor must give his bank account number so as to avoid any fraudulent encashment of any cheque/draft issued by the mutual fund at a later date for the purpose of dividend or repurchase.

Fund Selection
The investors have the option of choosing between equity funds which bear little higher risk factors, balance funds which bear slight risk, debt funds which bear high risk. Cash Funds or short term floating rate funds do not bear any risk factor.

The several schemes of the mutual funds cater to different needs of the investors. A person who needs cash within a short time span may invest in cash fund. A short-term bond fund would be helpful for a person who expects a return on investment in 6 - 12 weeks. An equity fund or income fund is for a person who expects

The application form should be submitted along with cheque mentioning the amount to be invested and the cheque should be in favour of the scheme in which the investor wants to invest. Please check the important documents and process in this regard.

Important Documents and Processes.

"An investor must mention clearly his name, address, number of units applied for and such other information as required in the application form."

1. The Application Form is complete in all respects & signed by all applicants
2. Name, Address and Contact Details are mentioned in full.
3. Bank Account Details are entered completely and correctly. The 9 digit MICR Code of your bank is mentioned in the Application Form.
4. KYC Acknowledgement of All Applicants are submitted
5. Appropriate Investment Option is selected. If the Dividend Option is chosen, Dividend Payout or Re-investment and Dividend Frequency is indicated.
6. If units are applied for Jointly, Mode of Operation of account is indicated.
7. Your Investment Cheque / DD is drawn in favour of Scheme / Plan, dated and signed.
8. Please write the Application Number / Folio Number on the face of the cheque
9. A cancelled Cheque leaf of your Bank is enclosed in case your investment cheque is not from the same account. 
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How is TDS calculated for NRI Investment ?

TDS rate for Short Term NRI investor's under Equity Scheme(s) = 15% (A)
Surcharge = A x 10% = 1.5% (B)
Education Cess = A + B x 3% = 0.495% (C)
TDS to be deducted = A + B + C = 16.99%

TDS rate for Short Term NRI investor's under Non - Equity Scheme(s) = 30% (A)
Surcharge = A x 10% = 3% (B)
Education Cess = A + B x 3% = 0.99% (C)
TDS to be deducted = A + B + C = 33.99%

TDS rate for Long Term NRI investor's under Equity Scheme(s) = NIL

TDS rate for Long Term NRI investor's under Non-Equity Scheme(s) = 20% with indexation benefit. (A)
Surcharge = A x 10% = 2% (B)
Education Cess = A + B x 3% = 0.66% (C)
TDS to be deducted = A + B + C = 22.66%

What else you should know about TDS for NRI's

Interest on bank deposits Tax Free so No TDSInterest earned on Non Resident External (NRE) accounts and Foreign Currency Non Resident (FCNR) accounts are tax free in India. Hence, there would be no TDS.

Interest on all other investments
  • Capital gains on securities 
Equity shares and equity mutual funds (mutual funds with more than 50 per cent in equities)

Long term capital gains, that is profits made on sale after 1 year from date of purchase, on
equity shares and equity mutual funds are exempt from tax. There will be no TDS applicable.

Short term capital gains, that is, profits on sale within one year of date of purchase, will be
subject to a TDS of 15 per cent.

Also Refer:Form 15G or Form 15H

  •   Debt mutual funds, corporate debentures

Long term capital gains from debt mutual funds and corporate debentures (when sold in the secondary market) will be subject to TDS at 10 per cent.

Short term capital gains will be subject to a TDS of 30 per cent.

  • Capital gains on other assets like house property, gold
Long term capital gains will be subject to a TDS of 20 per cent.

Short term capital gains will be subject to a TDS of 30 per cent.


Dividends from equity shares, equity mutual funds and debt mutual funds are exempt in the hands of the share or unit holder.

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