The Govt is considering a proposal that will take away long-term capital gains benefits from a majority of debt mutual fund schemes. Here’s what investors need to know
The Govt is considering a proposal that will take away long-term capital gains benefits from a majority of debt mutual fund schemes. Here’s what investors need to know
Taxation of capital gains of investors in debt funds, which have 35% or less of their AUM in domestic equities, will be at the slab level.
Taxation of capital gains of investors in debt funds, which have 35% or less of their AUM in domestic equities, will be at the slab level.
What is changing?
What is changing?
Currently, investors in debt funds pay income tax on capital gains according to their income tax slab for a holding period of three years.
Currently, investors in debt funds pay income tax on capital gains according to their income tax slab for a holding period of three years.
Current rule (1)
Current rule (1)
After three years, investors are taxed at the rate of 20% with indexation benefits or 10% without indexation. But this is going to change.
After three years, investors are taxed at the rate of 20% with indexation benefits or 10% without indexation. But this is going to change.
Current rule (2)
Current rule (2)
The proposal would take away the tax advantage for majority of debt mutual funds.
The proposal would take away the tax advantage for majority of debt mutual funds.
Impact
Impact
The new proposal is likley to give a boost to bank fixed deposit schemes and also pure equity funds. This will also do away with the arbitrage between different debt instruments
The new proposal is likley to give a boost to bank fixed deposit schemes and also pure equity funds. This will also do away with the arbitrage between different debt instruments
Who will benefit?
Who will benefit?
The proposed income tax at slab rate on amortisation of debt in the hands of InvITs/REITs unitholders will be restricted to the excess sum received by them over the issue price.
The proposed income tax at slab rate on amortisation of debt in the hands of InvITs/REITs unitholders will be restricted to the excess sum received by them over the issue price.