Last Friday, the Lok Sabha passed the Finance Bill with 45 amendments, taxing gains from debt funds, irrespective of the holding period, at the income tax rate. The move has put an end to the long-term capital gains taxation and indexation benefits enjoyed by the ₹40-trillion MF industry.
From April 1, the post-tax returns from investing in debt MFS are expected to fall sharply, particularly for those in the highest tax bracket. Industry players say AIFS, aimed at high net-worth individuals (HNIS), are set to gain thanks to the tax parity with debt MFS.
"Currently, there is a difference in taxation at the investor level between debt AIFs and debt MFs. The former are taxed at a marginal rate while the latter attract a long-term capital gains tax rate of 20 per cent (if held beyond three years), along with indexation benefit," Nilesh Dhedhi, fund manager, Avendus Structured Credit Fund, told Business Standard.
This story is from the March 27, 2023 edition of Business Standard.
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This story is from the March 27, 2023 edition of Business Standard.
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