Here's how you can save taxes on your mutual fund investment

Considering the boom in Indian market, the Economic Survey 2018 has stated that investors have reallocated their portfolios toward shares, with inflows through stock mutual funds to five times than previous year’s level.
 
This clearly states that investors have an appetite for the mutual fund market, and the pace of this scheme looks very promising ahead.
 
If they have to pay taxes on the gains arising from this market, they would definitely feel disheartened. Due to this reason perhaps, the government is encouraging investors for investment in such market, laying out various methods for savings on taxes.
 
In case you decide to make investment in mutual funds for long-term, it is always advisable to ensure that any gains you make through these funds are not taxed.
 
Here's a list of factors one can follow, and save big on mutual fund gains, as per BankBazaar.
 
Long-Term Investing
 
A person can always choose to invest in equity and debt mutual funds scheme, as they both offer several provisions to help you reduce or negate capital gains tax on your investments.
 
For equity funds, you merely need to hold onto your units for a period of one year or more for your gains to qualify under the long-term bracket.
 
There is zero-tax on long-term capital gains. For debt funds, 20% tax is levied for long-term capital gains if the investment is held in excess of 3 years.
 
This tax is applied with indexation, enabling you to reduce your tax outgo, the longer the tenure, as per the report.
 
Balanced Funds
 
If you want to have mix of both equity and debt fund, this scheme would be the best option as it enables investors without any significant tax impact.
 
Although, one needs to make sure, in case holdings are dominant in equity, then it is an equity-oriented balanced fund, and as mentioned above, gains over a year old fall under the ambit of long-term capital gains.
 
According to BankBazaar, even though such a fund’s holdings may veer between equity and debt through the course of a year, you needn’t expect any tax impact as long as you stay invested in such a fund.
 
Pause your SIPs
 
This scheme does not require a heavy amount of investment, it gives you opportunity to start your account at a small sum which can be paid at regular intervals via Systematic Investment Plan (SIP).
 
The small sums that you invest regularly are invested to buy funds. This also develops a regular habit of investing which is useful in long term wealth creation.
 
However, in case you are short on funds, and decide to redeem your Mutual Fund units for additional liquidity, you may attract short-term capital gains tax on units that may not qualify for long-term capital gains.
 
Under such cases, it is best advisable to pause your SIPs instead - as this will help you with funds that were otherwise dedicated to those funds, and will allow your existing units to remain invested in the market.
 
Additionally, one needs to remember that there are exit load charges, levied by  some mutual funds industry, when you redeem your investments before a set period of time.
 
So make sure you are familiar with all the terms and conditions, while making investment in mutual fund market.