Ch.8 · Dividend and STT Taxation · medium
What is the tax treatment of returns from Overnight Funds?
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EXPLANATION
Overnight funds invest in 1-day maturity instruments and are classified as debt mutual funds (equity < 65%). Post April 2023, all gains from overnight funds are taxed at the investor's applicable slab rate regardless of holding period. This makes overnight funds similar to savings accounts from a tax perspective — though they typically offer better pre-tax returns than savings accounts, the tax burden is identical.
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