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What is the regime for equity schemes?
As per income tax rules, gains arising from sale of units in equity-oriented mutual fund schemes, if at least 65% of the fund invests in domestic stocks, will be taxed as short term capital gain (STCG) if sold within one year of purchase and as long term capital gain (LTCG) if sold after one year of purchase. What changes have been made in the budget?
As per the new proposals, equity investors will get an additional ₹25,000 as tax-free income in a financial year as LTCG up to ₹1.25 lakh will be exempted by ₹1 lakh. Investors will have to pay LTCG tax at the rate of 12.5% from the earlier 10% for gains above ₹1.25 lakh in a financial year from equity-oriented mutual funds. STCG tax for sales within a year is 20% from the earlier 15%. Which equity funds are covered?
Funds in which equity holdings are more than 65% of the total portfolio are classified as equity funds for taxation purposes. All equity schemes, arbitrage funds, balanced funds (which typically have 65-75% equity and 25-35% debt) and equity savings funds (equity, debt and arbitrage) are classified as equity-oriented funds from a taxation perspective. What are the changes for the debt scheme?
No changes have been proposed for debt-oriented schemes in the budget. Investors will have to pay capital gains tax on these schemes as per their income slab, irrespective of the holding period. Is indexation facility available for any scheme?
As per the budget proposals, indexation facility will not be available for any mutual fund scheme. Earlier, some schemes holding 35-65% equity in categories like multi-asset and hybrid could get the benefit of indexation. Investors who hold these schemes for at least 24 months will have to pay LTCG tax at the rate of 12.5%. If they sell before 2 years, they will have to pay STCG tax as per their slab rates. What about Gold Scheme, FoF?
Fund of funds (MFs that invest in other funds), international funds (with more than 35% exposure to foreign equities) and gold/silver funds were treated as debt instruments. Now, fresh investments held for at least 24 months will attract LTCG tax of 12.5%, while a holding period of less than 2 years will attract STCG tax as per the slab rate.
2024-07-31 18:41:33
New Delhi: With assets under management of over Rs 60 lakh crore, mutual funds are becoming a popular way for retail investors to participate in the capital market. In the new budget, changes have been made in the taxes levied on capital gains in financial assets. Know the answer to every question related to this…
As per income tax rules, gains arising from sale of units in equity-oriented mutual fund schemes, if at least 65% of the fund invests in domestic stocks, will be taxed as short term capital gain (STCG) if sold within one year of purchase and as long term capital gain (LTCG) if sold after one year of purchase.
As per the new proposals, equity investors will get an additional ₹25,000 as tax-free income in a financial year as LTCG up to ₹1.25 lakh will be exempted by ₹1 lakh. Investors will have to pay LTCG tax at the rate of 12.5% from the earlier 10% for gains above ₹1.25 lakh in a financial year from equity-oriented mutual funds. STCG tax for sales within a year is 20% from the earlier 15%.
Funds in which equity holdings are more than 65% of the total portfolio are classified as equity funds for taxation purposes. All equity schemes, arbitrage funds, balanced funds (which typically have 65-75% equity and 25-35% debt) and equity savings funds (equity, debt and arbitrage) are classified as equity-oriented funds from a taxation perspective.
No changes have been proposed for debt-oriented schemes in the budget. Investors will have to pay capital gains tax on these schemes as per their income slab, irrespective of the holding period.
As per the budget proposals, indexation facility will not be available for any mutual fund scheme. Earlier, some schemes holding 35-65% equity in categories like multi-asset and hybrid could get the benefit of indexation. Investors who hold these schemes for at least 24 months will have to pay LTCG tax at the rate of 12.5%. If they sell before 2 years, they will have to pay STCG tax as per their slab rates.
Fund of funds (MFs that invest in other funds), international funds (with more than 35% exposure to foreign equities) and gold/silver funds were treated as debt instruments. Now, fresh investments held for at least 24 months will attract LTCG tax of 12.5%, while a holding period of less than 2 years will attract STCG tax as per the slab rate.