Joint mutual fund and income tax

In case of a joint mutual fund investment, the primary (first holder) is liable to comply with the income-tax laws. Any income from such an investment is also taxed in the hands of the first holder.

Further note that gains from mutual funds are taxed only when they are realised, that is, in the year in which the investment in mutual funds is sold or redeemed. There is no tax on the appreciation in the value of your mutual fund investments until they are sold and realised.

Let's assume, if you are a first holder, your wife is a joint-holder and your daughter is a nominee in an investment, then they (wife and daughter) do not need to file an income-tax return simply because they are a joint-holder and a nominee in the investment made by the you (first holder). However, if you have realised any gains by selling the investment in mutual funds, you will have to declare it as income in your income tax return under the head 'Income from Capital Gains'. Gains from mutual funds are taxed as capital gains.

Further note that someone whose gross annual income (without any deductions) does not exceed Rs 2.5 lakh, that person is not required to file the income tax return.

You can also go to the 'Tax' tab under 'My Investments' section of Value Research website to view your tax liability and much more.

Also read:

How to file your ITR

Income tax basics