How are mutual funds returns taxed

Mutual funds make it easy to achieve your financial goals, which is why they are usually considered one of the most beneficial investing options. One of the biggest advantages of mutual funds is that they are cost-effective investment options. Tax-efficient returns could be obtained from your mutual fund investment.
Variables Determining the Taxation for Mutual Funds:

• Types of Funds: Mutual Funds are divided into various groups for tax purposes like Equity-Oriented Mutual Funds, Debt-Oriented Mutual Funds, and so on.
• Capital Gains: When you sell a capital asset for more money than it costs to purchase, you make a profit, known as a Capital Gain.
• Dividend: A dividend is a portion of accumulated profits that the Mutual Fund house distributes to the scheme’s investors; investors do not need to sell their assets to receive a dividend.
• Holding Period: The tax you will pay on your capital gains depends on the Holding Period. Therefore, less tax will be due if your Holding Period is longer. Because India’s income tax laws encourage longer holding times, keeping your investment longer lowers your tax burden.