1) MIPs are schemes created by mutual funds that seek to generate regular income. There is no guaranteed rate of return.
2) MIPs invest primarily in debt instruments, but hold a small portion in equity (between 5 and 35%), to enable growth in investments.
3) Investors can choose from growth and dividend options in an MIP, depending on their need and tax status.
4) Investors choosing a growth option can redeem a part of their units regularly using a systematic withdrawal plan to generate regular income.
5) Withdrawals are subject to capital gains tax, but an investor who falls in the tax-free or low-tax category, can use it to reduce his tax outgo.
6) The dividend distributed by an MIP is tax-free in the hands of the investor, but is given after a dividend distribution tax has been paid directly by fund.
Courtesy : Centre for Investment Education and Learning (CIEL)
2) MIPs invest primarily in debt instruments, but hold a small portion in equity (between 5 and 35%), to enable growth in investments.
3) Investors can choose from growth and dividend options in an MIP, depending on their need and tax status.
4) Investors choosing a growth option can redeem a part of their units regularly using a systematic withdrawal plan to generate regular income.
5) Withdrawals are subject to capital gains tax, but an investor who falls in the tax-free or low-tax category, can use it to reduce his tax outgo.
6) The dividend distributed by an MIP is tax-free in the hands of the investor, but is given after a dividend distribution tax has been paid directly by fund.
Courtesy : Centre for Investment Education and Learning (CIEL)
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