Stressing {that a} deep and vibrant bond market is essential to spur personal investments, India’s apex mutual fund physique has urged the Finance Ministry to rethink the imposition of short-term capital positive factors tax launched final 12 months on debt-oriented mutual funds with fairness publicity of as much as 35%.
In its proposals for the upcoming Union Funds 2024-25, the Affiliation of Mutual Funds in India has mooted an modification to Part 50AA of the Finance Act, 2023, to encourage retail investor participation in bond markets by means of such debt funds, by bringing them on par with the tax remedy for debentures and authorities securities. For these devices, capital positive factors held for over three years are taxed at 10% with none indexation, with the holding interval decreased to 12 months for listed debentures.
Earlier than the introduction of part 50AA, such mutual fund schemes loved the dual good thing about indexation and decrease long-term capital positive factors tax fee, if held for greater than 3 years. Nonetheless, they’re now thought of as short-term capital property no matter holding interval.
