Invest in Mutual Funds to save tax

A mutual fund is a financial instrument offered by different financial institutions, helping people to invest and grow their wealth. Investors buy units or shares of a fund and the money collected goes into buying securities. There are different types of mutual funds available in the market like stock, equity, bond and hybrid funds based on what it is invested in. Investors generally have to pay a premium amount at regular intervals till the term of the fund matures. When the return of it is higher than the amount it was bought at, this is referred to as the capital gain which is usually taxed in investments.
Usually capital gains are what are taxable for investors. However with it, there are exceptions. A short-term debt fund that is redeemed within a year is taxable. However if held for longer than a year, the capital gains tax is significantly reduced. Similarly, an equity fund held for more than a year, the tax is seriously reduced and in some cases may be negligible. On the other hand, dividends from both equity and debt funds are bereft of taxation.
So go for mutual funds and get benefits of saving taxes on your current taxable income.