Thread by @tradersushma

HOW ARE ETFs TAXED ?

A Thread🧵
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#etfseriesbytradersushma
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One more topic on ETF chapter.

This is my 5th post in this series & here I'll describe the Taxation aspects of ETFs. Follow my earlier posts here👇

https://twitter.com/tradersushma/status/1442183918174699525?s=20

https://twitter.com/tradersushma/status/1443174438216749056?s=20

https://twitter.com/tradersushma/status/1444007126146318337?s=20

https://twitter.com/tradersushma/status/1445397386965233668?s=20

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There are two avenues by which an investor can earn money in equity ETFs.

⭐️One is Dividend.
⭐️Other is Capital gain.
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Dividends are usually reinvested but in case it is passed on to investor, they are added to the income of the investor & taxed as per the applicable income tax slabs rates.
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Capital gains can be short term or long term.

Short term capital gain tax arises on profits on sale of ETF units held for less than 1 year. It is taxed @ 15% plus cess & surcharges.
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Long term capital gain tax is applied if the units are held for more than a year. It is taxed @ 10% without indexation benefit. Profit up to Rs 1 lakh is exempted.
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In case of other ETFs like Gold, Debt or International ETFs short terms gains made on ETF units held for a period of less than 36 months are taxed as per the applicable income tax slab rate.
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Long term capital gains on units held for over 36 months are taxed at 20% after indexation benefit.

That's all on taxation of ETFs.
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If u found this piece beneficial, kindly retweet the 1st post in the thread to share it widely.

Stay tuned for more such informative posts.
Happy learning & earning.
Thank you!
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