The Finance Ministry on Friday March 23, 2023, brought in amendments to the Finance Bill to make taxation on debt mutual funds on par with Fixed Deposits.
From April 1, 2023, all gains from debt Mutual funds irrespective of the holding period will be taxed as short term capital gains at each individual investor’s applicable tax rate.
The indexation benefit applicable on long term capital gains is also removed.
The move opens up a limited time window of investment opportunity in debt funds till March 31, 2023 to benefit from tax efficiency in a scenario when the interest rates have moved significantly higher over the last one year.
Starting April 1, 2023, debt mutual funds will lose their tax advantage vis-à-vis the traditional fixed deposits that may lead to investors opting for fixed deposits or hybrid mutual funds to gain exposure to debt asset class.
| Got any questions or point of view on our article? We would love to hear from you.Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
