While filing Income Tax returns, Harshal Dharod conveniently forgot to mention his investments in mutual funds. It was only after his chartered accountant came out with past records and asked the businessman about his Rs 3-lakh investment in four schemes that he realised his folly.
“I had booked short-term capital gains of Rs 50,000 profit for which tax was applicable. But I had never looked into the fund house’s statements or kept a record,” he admits.
Poring over a mutual fund statement during the year will help evaluate the performance and exact amount that you hold. Besides performance, it will tell you the money made or losses incurred from investments and of course, dividends received. The April statement is a must read because the year-end performance will need to be used to file returns.
The documents will have details of personal and bank account, PAN (permanent account number) and folio number, transaction summary, transaction slip, fund name and option, current cost and market value are the key details you must ensure your statement mentions correctly.
Hence, it is necessary to keep an updated file of your latest fund statements, as they give you assurance of your confirmed transactions, with a brief summary of how your fund is performing.
Besides the personal details, it will have the name of the scheme, date and folio number, units held, purchase and sale price (if any), value of the fund and STT (securities transaction tax) paid on every transaction. Much like a bank account statement, this document indicates whenever there is a redemption, additional investment or dividend declaration for a time period (usually a month).
Rajesh Krishnamoorthy, managing director at iFast Financial Services, says one should go for a comprehensive report after reading the fund statements accurately. “This will help compute long and short-term gain taxes applicable for that financial year,” he adds.
More From This Section
Other than the fund house, there are such reports available from distributors and even from registrar and transfer agents (R&Ts) and a few websites which give an overall picture of your investments’ profit-and-loss summary and dividend income for the year.
Websites and R&Ts offer such reports free of cost, but they are issued only on request. They compile your investments (as disclosed to them) and generate these comprehensive reports with statements and summaries.
Declaring the dividend earned for the year acts as a proof for not paying tax on that income earned. These automated reports also help you know which tax is applicable on your investments whether long-term capital gain tax or an STGC (short-term capital gain) tax.
The income earned from equity-linked mutual funds of less than one year would have 15 per cent STCG as against no tax for income earned from a scheme held for more than a year. In case of debt mutual funds, it would be 10 per cent without indexation and 20 per cent with indexation.
Hemant Rustagi, chief executive, Wiseinvest Advisors, suggests people take interest in their investments even if they have hired a financial planner. “File only the latest and required statements to reduce confusion and unwanted paper-work,” he says. “One should read statements and keep a check on personal details, too, as any mistake in that could lead to a faulty investment.”