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Debt Mutual Funds Will Lose Tax Advantage Starting April
The Indian government will now treat gains arising from multiple mutual fund categories, including debt mutual funds, as short-term capital gains via an amendment to the Finance Bill, 2023, which was passed today in Parliament. The amendment was introduced to the Finance Bill in a clause that related to market-linked debentures. This means an individual in the highest tax bracket will pay a tax of 30%. Currently, gains arising from debt mutual fund schemes are considered long-term after a period of three years and taxed at 20% with indexation benefits. The government is trying to address a tax arbitrage, a finance ministry official told BQ Prime on the condition of anonymity. "Therefore, even the capital gains tax made available to mutual funds, including indexation benefits, was coming from that assumption," he said. Source - https://www.bqprime.com/business/debt-mutual-funds-will-lose-tax-advantage-starting-april#pfrom=home-business_topstories
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