Guide to Mutual Funds
Module Units
- 1. Introduction: Mutual Funds
- 2. How Does a Mutual Fund Investment Work?
- 3. Different Types of Mutual Fund Schemes
- 4. How Can a Customer Invest in Mutual Fund
- 5. Fundamental Attributes of Mutual Fund Scheme
- 6. Types of Mutual Funds
- 7. Concept of AUM
- 8. Equity Mutual Funds
- 9. Debt Mutual Funds
- 10. Hybrid Mutual Fund
- 11. Solution-Oriented Schemes
- 12. New Fund Offer (NFO)
- 13. Offer Document
- 14. Types of Risk in Mutual Fund
- 15. Net Asset Value
- 16. How do mutual funds calculate the reserve for declaring dividends?
- 17. Expenses Charged on Mutual Funds
- 18. What is Dividend Distribution Tax & when it is Levied?
- 19. Debt Mutual Funds
- 20. What is Indexation?
- 21. Risk Return and Performance of Funds
- 22. Types of Risks in Popular Mutual Fund Schemes
- 23. Which Factors Affect the Returns in a Mutual Fund Schemes
- 24. Methods Used To Evaluate The Performance Of A Mutual Fund
- 25. Mutual Fund Structure and Constituents
- 26. Key Personnel of an Asset Management Company
- 27. What are the objectives of AMFI?
- 28. Must know Concepts and Terms
- 29. Facilities and services that the investors GetS
- 30. Mutual Fund Advisors
- 31. Types of Commission for Mutual Fund Advisors
- 32. Mutual Fund Frequently Asked Questions
- 33. What are the KYC requirements?
What is Indexation?
Indexation is a significant factor in determining investment profit or loss. By modifying the acquisition price of the underlying asset or investment, indexation reduces your total tax burden.
In simple words, we can say indexation is the cost of acquisition adjusted upwards to reflect the impact of inflation.
Indexation rates are calculated using the Cost Inflation Index (CII). Cost Inflation Index (CII) is a figure issued by the Central Government every year that represents the year’s inflation. The government provides an index number for every financial year to facilitate this calculation. Let’s check out the cost inflation index for the last 22 years.
(Source: Income Tax India)
Indexation benefit is available only for capital gains realized in mutual debt funds. They are available only for long-term capital gain. Tax is payable on long-term capital gains after indexation, at 20% plus surcharge plus education cess.
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