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NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Mutual Fund Scheme Selection

An investor in the 30% tax bracket wants equity exposure but also wants to use a scheme that qualifies for equity taxation without holding direct equity only. Which scheme feature best ensures equity-oriented taxation treatment?

The scheme must invest at least 65% of its portfolio in equity shares of domestic companies to be treated as equity-oriented for tax. Having an equity benchmark or a bank-linked sponsor does not decide tax status, and bond-heavy funds are taxed differently.

  1. AInvesting at least 65% of its portfolio in domestic equity sharesCorrect
  2. BInvesting at least 65% of its portfolio in corporate bonds
  3. CHaving an equity benchmark such as Nifty 50
  4. DBeing launched by an AMC that is part of a bank group

Explanation

For taxation, an equity-oriented fund is one that invests at least 65% of its total proceeds in equity shares of domestic companies. A benchmark or sponsor identity does not determine tax status. Bond-heavy funds are taxed as non-equity funds.

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