Equities vs Equity Funds: A cost-benefit analysis

India has truly become a tax haven. If you are willing to take market-related risks, you can arrange your affairs in such a fashion that irrespective of the size of your funds, you do not have to pay even one single rupee as tax, legally!

Successive recent finance ministers, with a view to giving a boost to the share market, have doled out many tax concessions to the income from:

(i) Equities traded on a recognised stock exchange in India, and

(ii) Equity-based MF schemes.

Now, all that you have to do is to park all your investible funds in either of these two avenues and relax. The dividends are tax-free, and so are the long-term capital gains. The only question that needs an answer is — which of the two avenues should you choose?



Table 1 above presents a comparative gist of all the currently prevalent structure of equities and equity-based MF schemes.