Tax on Mutual Funds: These mutual fund schemes will be taxed like FD, this rule will change

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.

Mutual funds will also be taxed like FDs

Image Credit source: TV9 Network

This news is very important for those investing in mutual funds. If you also invest money in mutual funds, then soon you may get a big shock. The reason is that the government can end the tax benefits available in some mutual fund schemes. Want to know what is the proposal of the government…

According to media reports, the Ministry of Finance plans to amend the Finance Bill. By doing this, the capital gains tax on long-term investment in government debt mutual funds (LTCG) Can end the benefit. Instead of these schemes short term capital gain tax (STCG) can be brought within its purview.

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Debt funds will be taxed like FD

According to the proposed amendment, the debt funds whose investment in equity shares does not exceed 35 percent will now have to be taxed according to the income tax slab. At the same time, the profit on such investment will be considered as short term capital gain. This will be exactly the same as the bank’s fixed deposit is taxed.

Finance Minister Nirmala Sitharaman had announced in the budget speech this year that people can invest only up to 35 percent of the amount in debt mutual funds in equity shares.

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Now this tax benefit is available on Debt Fund

At present, investment in debt mutual funds for a period of more than 3 years is considered as long term investment. In such a situation, they have to pay tax at the rate of 20 percent with indexation benefit. On the other hand, without indexation benefit, the tax rate remains 10 percent. On the other hand, people whose investment is less than 3 years, they are taxed according to their income tax slab.

Now according to the new proposal, short term capital gain tax will have to be paid even if the investment is held for more than 3 years, if only up to 35 percent of the amount deposited in the debt fund is invested in equity shares.

Investment in gold will also come under tax net

The proposed amendment can be introduced in Parliament on Friday. This rule will come into force from 1 April 2023 only. Another provision in this is that the new rule will apply not only to debt mutual funds but also to investments in gold, international equity and domestic equity fund of funds.

Since this news came, there has been a decline in the share price of many mutual fund companies. The stock of HDFC AMC fell by 4 percent, Nippon AMC by 1.75 percent and UTI AMC by 2 percent.

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