Tax saving options 2023 for mutual fund/stock investors and what to expect from Budget | The Financial Express

Tax saving options in 2023 for mutual fund/stock investors and what to expect from Budget

Tax saving options 2023: Check four ways to save taxes in New Year for Mutual Fund and stock market investors and what they can expect from Budget 2023.

tax saving options for mutual fund and stock investors
Check Budget 2023 expectations and tax saving options for mutual fund and stock investors. Representational image

Tax saving options 2023: Mutual Fund and stock market investors have big expectations from Union Budget 2023. As the current year is coming to an end, let’s have a look at some tax-saving options available for mutual fund and share market investors and what they can expect from the Budget 2023.

What to expect from Budget 2023?

Experts suggest that the government can take several steps for the betterment of the mutual fund industry and investors and to deepen the equity market via mutual funds.

For instance, Bangar says there are specific schemes for income tax deduction purposes such as ELSS. “Instead of this, we can make it very simple. It would be better and simple to make all equity-based mutual fund investments eligible for a tax deduction. Also, there should not be any lock-in restriction.”

Similarly, the Budget should include provisions to create an environment in which ULIPs and Mutual Fund schemes can compete on an equal footing. For this, the tax treatment of capital gains associated with the redemption of mutual fund units and the withdrawal of investments from ULIPs offered by life insurance companies should be brought into line with one another.

Also Read: Income Tax Saving 2023: Complete Guide for Working Professionals

“Even though both kinds of investments serve the same objective, the current tax system gives ULIPs a distinct advantage. Unlike investments in mutual funds, which are subject to Long Term Capital Gains Tax (LTCG) at a rate of 10% on gains over Rs 1 lakh, investments in ULIPs are exempt from LTCG if the sum insured is at least ten times the premium paid and the money is withdrawn after a lock-in period of five years,” says Abhinav Angirish, Founder of

Experts also say that switching from a direct to regular plan or growth to dividend option within a mutual fund scheme should not be treated as transfers and subjected to LTCG.

“Units that are switched from (a) the Direct Plan to the Regular Plan or (b) the Growth Option to the Dividend Option or vice versa, all within the same scheme of a mutual fund, should not be considered to have been transferred and should not be subject to capital gains taxation. When it comes to ULIPs, changing from one investment choice to another is not seen as a changeover and is therefore exempt from taxation,” says Angirish.

Also Read: Income Tax relief from Budget 2023: What working professionals expect

Bangar further suggested that the holding period of debt investments is 36 months for long-term capital gain. It should be reduced to 24 months.

For stock market investors, experts suggested the rebate under Section 88E for STT/CTT should be re-introduced as it will have a significant income impact and result in more volume trading and ensure a larger collection of STT/CTT for the government.

“The current tax rate for short-term capital gains on listed equity shares that have been subject to STT are charged 15% + surcharge. Since this STCG arises after paying STT, it should be treated on par with LTCG. Any STCG should be permitted a tax exemption of up to Rs 1 lakh similar to LTCG, this will encourage more people to participate in the market and increase economic growth,” said Angirish.

Tax saving options for mutual fund/stock investors in 2023

According to Sujit Bangar, Founder, of, mutual fund and stock investors can use the following four options for saving taxes in 2023.

Pay advance tax on time: Most important thing for investors is to pay advance tax. This way they may be saving an extra interest @1% per month on corresponding tax.

Also Read: Union Budget 2023: 5 Income Tax expectations of Salaried Employees

Smartly defer booking profit: Long-term capital gain on equity is exempt up to Rs 1 Lakh. So it is always better to defer booking profit in such a way that each year LTCG on equity doesn’t cross Rs 1 lakh.

Take incidental deductions: If you are trading in shares or Futures & Options, don’t forget to take a deduction of incidental expenses.

Keep trading and investment portfolios separate: Investors should maintain a clear demarcation in their investment and trading portfolios. Selling from the investment portfolio will generate capital gain and selling from the trading portfolio will generate business profit.

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First published on: 28-12-2022 at 13:07 IST