Aditya Birla Sun Life Mutual Fund

Tax Planning Quiz - Tax Planning for Individual - ABSLMF

Tax Planning Quiz

  • Q1. Which of the following tax saving investments has the least lock-in period?
    • Wrong!

      Equity linked savings scheme

      Incorrect! The correct answer is Tax saving mutual funds. It was easy to get mixed up in the confusion. Tax saving mutual funds has a lock in period of only 3 years after which you can withdraw your investment, if you want to. In comparison, lock –in period for ULIPs is 5 years, NPS – upto age of 58, PPF – 15 years. So, choose wisely.

      Incorrect! The correct answer is Tax saving mutual funds. It was easy to get mixed up in the confusion. Tax saving mutual funds has a lock in period of only 3 years after which you can withdraw your investment, if you want to. In comparison, lock –in period for ULIPs is 5 years, NPS – upto age of 58, PPF – 15 years. So, choose wisely.

      Incorrect! The correct answer is Tax saving mutual funds. It was easy to get mixed up in the confusion. Tax saving mutual funds has a lock in period of only 3 years after which you can withdraw your investment, if you want to. In comparison, lock –in period for ULIPs is 5 years, NPS – upto age of 58, PPF – 15 years. So, choose wisely.

      Correct!!! Equity linked savings scheme have a lock in period of only 3 years after which you can withdraw your investment, if you want to. In comparison, lock –in for ULIPs is 5 years, NPS – upto age of 60, PPF – 15 years. So, choose wisely.

  • Q2. If you don’t do tax planning, which of the following are you likely to do?
    • Wrong!

      Both of these

      Incorrect! When you don’t plan your taxes, you not only pay more taxes but also make poor investment choices. It is highly likely that you have lost a lot of money to poor tax planning. Watch out!

      Incorrect! When you don’t plan your taxes, you not only pay more taxes but also make poor investment choices. It is highly likely that you have lost a lot of money to poor tax planning. Watch out!

      You are smart! Here’s a bag of chocolates for you.

      Incorrect! When you don’t plan your taxes, you not only pay more taxes but also make poor investment choices. It is highly likely that you have lost a lot of money to poor tax planning. Watch out!

  • Q3. ELSS or Equity linked savings scheme is another name for
    • Wrong!

      Tax saving mutual fund

      You must be an industry insider or a smart investor. This is not an easy one to get. Thumbs up!

      Incorrect! You see it is not your fault. Some names are really confusing. So, here’s filling up for you. ELSS is another name for a tax saving mutual fund. Now go brag about it.

      Incorrect! You see it is not your fault. Some names are really confusing. So, here’s filling up for you. ELSS is another name for a tax saving mutual fund. Now go brag about it.

      Incorrect! You see it is not your fault. Some names are really confusing. So, here’s filling up for you. ELSS is another name for a tax saving mutual fund. Now go brag about it.

  • Q4. When you sell a debt fund after 3 years of purchase, what rate of tax is applicable?
    • Wrong!

      20%

      Tough one! For no reason, taxes are a hated subject, both to pay and to calculate. Anyways, you should know that after 3 years, debt funds attract long-term capital gains tax at the rate of 20%. This tax is not on the full gain but on the gain adjusted for inflation. Search for Cost inflation index and long-term capital gains tax on debt funds.

      Hey tax expert, you must be the goto guy in your circle for investments and taxes. After 3 years, debt funds attract long term capital gains tax at the rate of 20%. This tax is not on the full gain but on the gain adjusted for inflation.

      Tough one! For no reason, taxes are a hated subject, both to pay and to calculate. Anyways, you should know that after 3 years, debt funds attract long-term capital gains tax at the rate of 20%. This tax is not on the full gain but on the gain adjusted for inflation. Search for Cost inflation index and long-term capital gains tax on debt funds.

      Tough one! For no reason, taxes are a hated subject, both to pay and to calculate. Anyways, you should know that after 3 years, debt funds attract long-term capital gains tax at the rate of 20%. This tax is not on the full gain but on the gain adjusted for inflation. Search for Cost inflation index and long-term capital gains tax on debt funds.

  • Q5. You can invest in a tax saving mutual fund upto a limit of
    • Wrong!

      No limit

      You got tricked! While under section 80C of Income Tax Act for the purpose of tax savings, you can take benefit only upto Rs. 1.5 lakhs when investing in tax saving mutual funds, there is no one is stopping you from investing any amount you wish to. Beware! There is a 3-year lock in.

      You got tricked! While under section 80C of Income Tax Act for the purpose of tax savings, you can take benefit only upto Rs. 1.5 lakhs when investing in tax saving mutual funds, there is no one is stopping you from investing any amount you wish to. Beware! There is a 3-year lock in.

      You got tricked! While under section 80C of Income Tax Act for the purpose of tax savings, you can take benefit only upto Rs. 1.5 lakhs when investing in tax saving mutual funds, there is no one is stopping you from investing any amount you wish to. Beware! There is a 3-year lock in.

      Whoa! This one needed super presence of mind. Take this compliment from us. Under section 80C of Income Tax Act for the purpose of tax savings, you can take benefit only upto Rs. 1.5 lakhs but no one is stopping you from investing any amount you wish to. Beware! There is a 3-year lock in.

  • Q6. In case of a Tax-Saving 5 year Bank FD, the investment is exempt from tax. At what rate is the interest on this FD taxed?
    • Wrong!

      As per tax bracket

      Too many people get confused, that if the investment in Tax-Saving 5 year FD is tax-free, the interest will be tax-free. Unfortunately, that is not the case. You are not one of those. You know that the interest is taxable at the rate of your tax bracket.

      Too many people get confused, that if the investment in Tax-Saving 5 year FD is tax-free, the interest be tax-free or taxable at a particular fixed rate. Unfortunately, that is not the case. The interest on the FD is taxable at the rate of your tax bracket.

      Too many people get confused, that if the investment in Tax-Saving 5 year FD is tax-free, the interest be tax-free or taxable at a particular fixed rate. Unfortunately, that is not the case. The interest on the FD is taxable at the rate of your tax bracket.

      Too many people get confused, that if the investment in Tax-Saving 5 year FD is tax-free, the interest be tax-free or taxable at a particular fixed rate. Unfortunately, that is not the case. The interest on the FD is taxable at the rate of your tax bracket.

  • Q7. Dividends received from mutual funds are tax-free for the investor.
    • Wrong!

      Yes

      Yes, of course, they are tax-free in the hands of the investor. Great job! However, note that in case of debt mutual funds, the fund pays out dividend distribution tax (DDT) of 25%+surcharge+ cess, amounting to a total of over 28.84%. And the equity mutual funds will also start levying DDT of 10%+ cess from April 2018.

      Ah, it was supposed to be easy. All dividends are tax free in the hands of the investors. Note that in case of debt mutual funds, the fund pays out dividend distribution tax (DDT) of 25%+surcharge+ cess, amounting to a total of over 28.84%. And the equity mutual funds will also start levying DDT of 10%+ cess from April 2018.

  • Q8. Which of the following is TRUE about a tax saving mutual fund?
    • Wrong!

      It invests most of its money in listed stocks

      True that! A tax saving mutual fund invests 80% or more of its money in listed stocks. Power of equity + tax saving – what a combination!

      Wish you were correct! Most investors desire a low risk tax saving option but for now a tax saving mutual fund is supposed to invest 80% or more of its money in listed stocks. Power of equity + tax saving – what a combination! Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

      Wish you were correct! Most investors desire a low risk tax saving option but for now a tax saving mutual fund is supposed to invest 80% or more of its money in listed stocks. Power of equity + tax saving – what a combination! Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

      Wish you were correct! Most investors desire a low risk tax saving option but for now a tax saving mutual fund is supposed to invest 80% or more of its money in listed stocks. Power of equity + tax saving – what a combination! Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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