Economy News

MF debt tax: fund houses seduce investors last week – Mintpaisa

Even as only a few asset management companies (AMCs) have officially reacted to the surprise tax rollback of the popular hybrid debt mutual fund category, which was introduced by amendments to the finance bill adopted on Friday, some AMCs are urging their clients to make the most of a final week by investing more in these funds before March 31.

In line with changes introduced in the tax laws that will come into effect on April 1, debt mutual funds with up to 35% of the portfolio invested in domestic equities will no longer receive the benefits of indexing for tax purposes, even if they are detained for more than three years. . Capital gains from debt funds, international funds and gold funds, regardless of their holding period, will be taxed at the tax rate applicable to an individual as short-term capital gains.

“With this change, debt funds and traditional investments will now see parity in taxation,” Axis AMC, which manages Axis’ mutual fund plans, said in a statement on Saturday, before emphasizing than existing investments and those made at the end of March or before. will not be affected by the tax changes. “The comparison between such opportunities will largely be based on performance,” he added.

“A cautionary note to existing investors through this news feed remains, that of existing investments in debt funds, international funds and gold funds, and even new investments made in these through March 31. … will continue to attract taxation of long-term capital gains once they are completed. three years. Investors could review their portfolio and reallocate funds to debt and global funds to optimize their portfolios,” the CMA said.

PPFAS Asset Management, which manages the Parag Parikh Conservative Hybrid Fund which invests primarily in debt to generate regular income, while providing its investors with long-term capital appreciation from equity investments, made a speech more direct to investors in a statement released Friday evening.

“As all investments undertaken before March 31, 2023 will continue to receive the benefits of the LTCG and indexation, we suggest that you undertake your investment in such a way that the allocation process is completed by March 31, 2023…which, in turn, will lead to you being able to benefit from the current regime of 20% capital gains tax after enjoying the benefit of indexation”, a- he declared.

“Existing investments should also be held for as long as possible as they will continue to benefit from the current concessional tax rate on long-term capital gains,” the fund house added.

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