ICICI Prudential Technology Fund is an exciting investment option for people who want to invest in the growth of technology. The fund has many advantages and has received a high rating from the NASD Securities Research. But before you make a decision to invest in the fund, you need to understand how it works.
ICICI Prudential Technology Fund
ICICI Prudential Technology Fund has been around since March of 2000, but it is not a money tree. It can be purchased as a lump sum or via a SIP. It is also among the most liquid funds in the country. It has a minimum investment of 5000.
The fund also boasts of an average NAV of 7.4%. The fund boasts a stellar performance of 75% over the last 3 years. The fund also has a very small turnover rate of 5%. The fund is a worthy investment. Unlike other mutli-manager schemes, the fund is a pure play. The only downside is that there is a small fee involved for redemption. It is also the most difficult fund to get hold of, but it is worth the effort. It is the only fund that can be accessed via a web portal. It also has a large slew of perks and incentives. The best part is that the fund is backed by a diversified slew of leading banks including SBI, HDFC, ICICI, Citigroup, and HSBC. It is also among the few funds to offer a no-transaction fee policy, and has a wide range of investment options.
Taxation of LTCG returns
ICICI Prudential Technology Fund is an equity - sectoral fund which focuses on technology-intensive companies. It is managed by Atul Patel since May 23, 2012 and is ranked 37 in the sectoral category. It has given a CAGR return of 12.4% since the launch and 75.7% since 2021. It is one of the sectoral funds that is recommended for investors who are willing to invest in mutual funds as SIP investment.
The investment strategy of the fund is based on growth oriented investing. It is said that equity exposure is about 65% while the rest is invested in debt. Equity funds are invested in small and mid cap companies. A fund's portfolio debt exposure is considered as high when it crosses 65 percent. Generally, debt funds are taxed at the rate of 20%. However, the indexation benefit can reduce the tax on the gains.
a knockout postThe taxation of the returns of the mutual fund depends on the investor's income tax slab. Generally, the tax rate is 15% for short-term capital gains and 10% for long-term capital gains. There are also certain exemptions from tax on certain kinds of equity funds. These exemptions include tax exemptions for income from tax-free bonds, long-term capital assets and the dividends from equity funds. These exemptions can be claimed under Section 80C or 80U.
A long-term capital gain is the profit or gain from selling an equity stock that has been held for over a year. Depending on the capital gains tax rate, it is taxed either at 10% or 20% after indexation. If the gain is more than Rs.1 lakh, then it is taxed at 10%. On the other hand, gains of less than Rs.1 lakh are tax free. However, dividends received from debt funds are taxable in the investors' hands. The dividends are also disclosed in the ITR-1 under the head Income from other sources.
The long-term capital gains are also subject to applicable cess and surcharge. Generally, the rate of tax for long-term capital gains is 10% on profits from equity-oriented funds and 20% on profits from non-equity funds. The capital gains tax is calculated using the cost-inflation index. The indexation benefit can be beneficial in long-term debt investments.
If you are planning to invest in mutual funds, it is important to understand the taxation on the returns. There are online tools available that can be used to calculate the taxation. You can also get in touch with a financial expert for more information. However, it is best to read the investment product before investing. In addition, it is advisable to understand the exit loads and lock-in period. These factors can make a difference to your investment decision.
It is also important to remember that the gains from debt funds are taxed at the rate applicable to the current income tax slab. Likewise, gains on units redeemed before one year are considered as short-term capital gains and are taxed at 15%. The holding period for debt funds is different from that of equity funds. The holding period of equity funds is 365 days. However, the holding period for debt funds is three years.