Debt Funds

[kimat]

What about STT? If I park my money into a debt fund while waiting for a good entry into
an equity oriented fund, will I have to pay Securities Transactions Tax upon liquidating the debt fund?

[vasa1]

Originally Posted by kimat

What about STT? If I park my money into a debt fund while waiting for a good entry into
an equity oriented fund, will I have to pay Securities Transactions Tax upon liquidating the debt fund?

I'm doing a monthly systematic transfer from ICICI-Prudential Income (G) to their Infrastructure (D) fund. I don't see any mention of STT.

I think STT is only on equity and equity-funds.

[swama694]

Hi

I have a doubt regarding taxation on debt funds.
I have investment in birla Income plus for past one year. I am planning to redeem it now. So I wish to know whether the tax will be deducted at source by the BIrla AMC like bank interest TDS or I have to file it along with tax returns in coming march.

Regards,

Swama694

[mrindia]

Hello!
You have to pay tax on it in ur IT return. AMC will not deduct TDS. Also if ur investment is >1yr, u will get 'indexation bennefit'.
mr india

Originally Posted by swama694

Hi

I have a doubt regarding taxation on debt funds.
I have investment in birla Income plus for past one year. I am planning to redeem it now. So I wish to know whether the tax will be deducted at source by the BIrla AMC like bank interest TDS or I have to file it along with tax returns in coming march.

Regards,

Swama694

[dabster]

Hi All,

Fixed Maturity Plans(debt funds) are considered better than normal Bank Fixed deposits, but what are the reasons behind that.
1. Actually how does these debt funds make money,...?

2. Also What are Gilt funds, how different are they from normal Debt funds..?

Traderji is quite a mature community about these discussions but still update me, may be post any pointers you have for all this info...

3. Also suggest good Debt fund options.

Thanks,

[Vicky78]

Originally Posted by dabster

Hi All,

Fixed Maturity Plans(debt funds) are considered better than normal Bank Fixed deposits, but what are the reasons behind that.
1. Actually how does these debt funds make money,...?

Debt Funds make money by charging a percentage of the asset size of the debt fund. This percentage appears as expense ratio in the fund

FMPs deliver returns as much as the current interest rate scenario (which can be equal to the bank deposits). the only advantage in FMP is when you invest over 1 lakh the returns from bank fd is taxable based on your tax bracket (30% if in the highes braket) whereas in a debt fund it is 20% for short term (<1 year) and 10% for long term (>1 year)

2. Also What are Gilt funds, how different are they from normal Debt funds..?

Gilt funds are those debt funds that invest only in Central goverment Sercurities.

3. Also suggest good Debt fund options.

Reliance Short term
Birla Sunlife Short term
HDFC Hi Short term

Birla sunlife Income (higher maturity)

Broadly based on maturity funds can be classified as short term and long term. Short term funds are not affected by interest rate changes whereas returns of long term funds are inversely proportional to interest rate changes.

The risk adjusted return of short term funds are much better than long term funds.