If you invest in mutual funds, then you are going to be shocked by this news. Because the government can abolish tax benefit exemption on investing in some funds of mutual funds.
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If you invest in mutual funds, then this news can prove to be useful for you. Let us tell you that the government is going to give a big blow to the investors in mutual funds. According to the information, the government can end the tax benefit exemption on investing in some funds of mutual funds. Let us tell you, Finance Minister Nirmala Sitharaman had announced in the budget this year that people cannot invest more than 35 percent in equity shares of mutual funds i.e. debt funds.
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. 1/2
— Radhika Gupta (@iRadhikaGupta) March 23, 2023
Tax benefit will not be available on this condition
Let us tell you, at present, investors in debt funds get the tax benefit of fixed deposits. If a debt fund is held for more than three years, long term capital gain tax is levied at 20% with indexation benefit. However, the interest earned on fixed deposits is taxed as per the slab.
As per the proposal, debt funds held for more than three years will no longer get the benefit of indexation and will not be eligible for the 20% tax benefit.
(This story is being updated.)