NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Taxation
Securities Transaction Tax (STT) on redemption of units of an equity-oriented mutual fund is paid by whom?
The investor redeeming the units bears the Securities Transaction Tax on redemption of equity-oriented fund units. The fund deducts it from the redemption proceeds and pays it to the government, so the AMC, distributor and registrar do not bear the cost.
- AThe asset management company
- BThe investor redeeming the unitsCorrect
- CThe distributor
- DThe registrar and transfer agent
Explanation
STT is levied on the redemption of equity-oriented fund units and is borne by the investor, deducted from the redemption proceeds by the fund. The AMC, distributor and RTA only collect or process it and do not bear it.
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