In a proposed amendment to the Finance Bill, 2023, the government has reportedly proposed to tax gains arising from debt mutual funds at the investor's slab rate, irrespective of the investment period.
Currently, debt mutual funds are treated as long-term investments if held for more than three years and taxed at the rate of 20% along with indexation benefits or 10% without indexation. For those with a holding period of less than three years, they are taxed according to their tax slab.
If the proposed amendment to the Finance Bill gets cleared, investments across duration will be taxed at the investor's slab rate and there will be no indexation benefits. This is in line with the tax structure of bank fixed deposits.
With this change, there is no tax arbitrage left across debt instruments be it bank deposits, debt MFs or life insurance savings products.
The amendment has also proposed to remove long term capital gains taxation for gold ETFs and international funds, which have the same tax structure as debt schemes at present.
Radhika Gupta, managing director and chief executive officer at Edelweiss MF, tweeted: I hope the proposed change in the Finance Bill to remove LTCG with indexation status on debt funds is reviewed. Financialization is just happening in India and a vibrant corporate bond market needs a strong debt MF ecosystem. The success of a program like Bharat Bond and target maturity funds in the last year was just the beginning of what could have been a lot of innovation in the bond category.
Meanwhile, a foreign brokerage said in a report today that the latest move is negative for MF industry having non-liquid debt AUMs of about Rs 8 lakh crore (19% of AUMs), as the relative attractiveness due to tax arbitrage goes away.
Liquid MFs of Rs 6.6 lakh crore will not be impacted materially as they are anyways a short-term product and there is no material change in tax attractiveness, it said.
Revenue contribution from non-liquid debt products is 11-14%. This is moderate to low impact as bulk of the revenue/profitability for AMCs accrues from equity AUMs and non-liquid debt AUMs are neither higher growth nor higher profitability segments, it added.
Powered by Capital Market - Live News
Beware of fraudulent tips, unauthenticated news and advice on stock market.
At BOB Capital, your account security is our topmost priority. Beware of receiving fraudulent communications, unauthenticated trading tips and unsolicited calls on trading in stocks from unverified sources, received through Whatsapp, Telegram, SMS, Calls, etc and take an informed decision before investing.
What should you do if you receive a trading tip over phone or SMS?
Report unsolicited messages to the Stock Exchange on +91 8291833676 or on designated email id i.e. feedbk_invg@nse.co.in. Please visit here to understand better.
Please visit CVC website at pledge.cvc.nic.in and take "Integrity Pledge" to be an active part of the "Satark Bharat, Samriddh Bharat" (Vigilant India, Prosperous India).
Filing complaints on SCORES - Easy & quick: a. Register on SCORES portal scores.sebi.gov.in/ b. Mandatory details for filing complaints on SCORES are i. Name, PAN, Address, Mobile Number, E-mail ID. c. Benefits: i. Effective communication ii. Speedy redressal of the grievances.
Valued Customer,
BOB Capital Markets Limited (BOBCaps) is firmly committed to the safety of your wealth. We would like to bring to your notice certain precautions that you certainly must take against potential tele-fraudsters/ unscrupulous and unregistered portfolio managers:
ALWAYS AVOID
We would like to caution you against such fraudulent calls and SMSes and urge you to be alert. Follow the golden rule:
Do not share your Login Credentials or Passwords with anybody
BOBCaps employees / representatives never ask for your password.
Certain tele-fraudsters / unscrupulous and unregistered portfolio managers call customers or SMS them on the pretext of providing investment tips and lure them to invest through their bogus firms by promising huge profits.
Such deceitful callers ask the customer to share his/her login credentials with passwords to allow trading in their accounts, assuring huge returns.
Often trades done in the customer’s accounts are far from the best interest of the customers. Holdings of customers are often sold and with the funds, trades are then placed in illiquid securities at unrealistic prices.
At times, the holdings of customers are sold at prices detrimental to the customer. The so-called “portfolio manager” assures profits, which naturally does not materialize. Customers are deceived into providing access to their trading accounts, thereby allowing such fraudsters access to funds and securities available to execute trades, injurious to the customer’s interest.
In our continuous effort to keep you safeguard from the market related frauds and increase awareness while conducting trades, we request you to go through the Press Release issued by the NSE and would request you to ensure that you do not engage with the individuals and entities mentioned below: