365Telugu.com Online News, New Delhi, 25th March 2023: The Finance Bill-2023 has been approved by the Lok Sabha, paving the way for the implementation of the new tax rules from April 1st. As per this new rule, profit from debt mutual funds will now be treated as short term capital gain. Apart from this, the benefit of indexation will no longer be available on long term capital gains.
The new rule is a direct loss contract for those investing in debt mutual funds. Irrespective of the period for which an investor holds the money in a debt mutual fund, the gains from it are counted under the short term capital gains (STCG) category.
Mutual fund expert Ramakant Mujawadia says the tax calculation of debt mutual funds is similar to that of FDs. On earlier dates, index, benefit is available. Because of this, if the money is kept in it for more than 3 years the tax would be lower.
Now from 1st April it will be treated like FD. Income tax comes under the slab. If you fall in the 10 percent tax slab, 10 percent, and 30 percent if you fall in the 30 percent slab.
Investors who are in debt may turn to FDs, he said. However, there are many more options available in mutual funds. Balance Advantage Fund, Arbitrage Fund. Investors can also invest in these funds.
It is noteworthy that the Budget 2023-24 has said that the profits of mutual funds with less than 35 per cent investment in equity will be kept in the short-term capital gain category.
Regardless of its investment period. Currently, if an investment is made in a debt mutual fund for a period of more than 3 years, the gain from it is kept in the long-term capital gain category.
The decision is believed to have a direct impact on institutional investors and large-cap investors. Small investors will not be affected much.