Ch.8 · Dividend and STT Taxation · medium
What is the tax status of mutual funds themselves — do they pay tax on portfolio income?
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EXPLANATION
Mutual fund trusts are structured as pass-through entities for tax purposes. They generally do not pay tax on portfolio income — income and gains are 'passed through' to unit holders who are taxed. However, mutual funds must pay STT on equity transactions and cannot claim certain business deductions. The scheme itself is not a taxpaying entity for capital gains — investors pay when they redeem.
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