ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Alisa is looking for an investment that is structured to have tax benefits. She should look for information on: tax-advantaged investments. Harris is concerned about the effects of inflation on his investment returns.

Detailed explanation-2: -What is Tax-Advantage? Tax Advantage is the investment or saving plan that provides tax exemption, deferred tax, and other tax benefits.

Detailed explanation-3: -Short term capital gains (if the units are sold before one year) in equity funds are taxed at the rate of 15% plus 4% cess. Long term capital gains tax in equity funds is 10% + 4% cess provided the gain in a financial year is over Rs 1 Lakh. Long term capital gains upto Rs 1 Lakh is totally tax free.

Detailed explanation-4: -The correct answer is C. Municipal bond funds provide tax advantages to investors. The investors are free not to pay taxes on municipal bonds if they follow the prescribed rules and regulations.

Detailed explanation-5: -Mutual Funds pay out dividends to investors on a regular basis. So, if you invest in ELSS funds, the dividend you receive is entirely tax-free. The best part about this benefit is that there is no maximum limit on the dividend amount for exemption.