Now no more tax benefits on LTCG (Long term capital gain), which used to be taxed at 20% with indexation benefits. But from the 1st of April 2023, there will be no advantage like this. As far as we came to know the Finance Bill had made some amendments, one of the amendments is making investments in a mutual fund with up to 35% equity exposure in domestic companies. Read More Business News on our website.

Tax mutual funds news

In that case, debt funds are eligible to be taxed as per the investor’s income tax slab rate, therefore the taxation treatment for debt funds has come on par as compared to other bank fixed deposits. This is the stage where capital gains are added to the invested amount of investors and after that, the amount of income is taxed as per his or her slab rate.

Know the Amendment in Tax on Mutual Fund

Previously long-term capital gain was applicable after three years not before that, but from April an investor will be taxed as per her or his slab rate irrespective of the holding time period in a debt mutual fund. In case if investor belongs to the highest income tax slab rate which is 30%, in that matter, he or she will have to pay 35.8% including surcharge and cess on their gain of the mutual fund without indexation benefit.

As per the source, it is definitely going to affect investor flow into debt mutual funds and also the bond market. As you know mutual funds are great to offer liquidity in the domestic bond market. Because now there will be no tax benefit in LTGC, so flow might have to see some challenges. It can go down and take some time to cover the original flow. Many of the big personalities have made different statements related to the amendment. Kirtan Shah, the founder, and CEO of Credence Wealth has passed the statement that “This move not only impacts debt MFs but also international funds and gold funds”.

According to the source, investors might get some tax alternatives from fund houses with the help of arbitrage (equity derivative strategies). We will update you with the latest news on the same site, till then stay connected with us.

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