by Government has introduced the amendments in the Finance Bill 2023 and levied Income tax as per slab on the short term gain by the Debt Mutual funds. The taxation will also be applicable on Gold Mutual funds, International equity funds and fund on fund. The introduction of tax has brought the bank fixed deposits (FDs) on-par with debt mutual funds and insurance savings products. The different slabs of Income tax on debt mutual funds are :
1) Equity oriented scheme having minimum 65% equity.
2) Schemes having not more than 35% equity to be taxed as short term capital gains.
3) Mutual funds having more than 35% but less than 65% equity, eligible for indexation and to be taxed at 20%.
Also Know – Can A Mutual Fund Investor Get His Money Back, Incase of Loss ?
An amendment to the Finance Bill 2023 with 64 official amendments. Debt mutual funds will be stripped off the long-term tax benefit (LTCG) if they invest less than 35% of their assets in equities. Such mutual funds will attract short term capital gains tax. The indexation benefit will be removed for debt funds held for more than three years, and they will no longer be eligible for a 20 percent tax rate.