What will be the impact of the budget on mutual funds?
Finance minister Nirmala Sitharaman presented the country's budget on Tuesday, 23 July. She has taken several steps to simplify the tax structure and for investors. These changes will also affect the mutual fund industry. After the budget, the taxes levied on short term and long term investments have also changed. Today we will try to understand this in detail.
Taxes levied on mutual funds have been simplified
To explain the impact of the budget on the mutual fund industry, radhika Gupta, MD and CEO of Edelweiss Mutual Fund, has shared a post and video on the social media platform X. radhika Gupta wrote that before the budget, many taxes were levied on mutual funds. These included long term and short term capital gains, marginal tax rate and indexation benefits. Now all these have been made easier. Also, indexation has been abolished.
Three categories of taxes are being levied
According to radhika Gupta, now three categories of taxes are being levied on mutual funds. The first category will include equity mutual funds with more than 65 percent holding. capital asset tax will be levied on them, which will be 20 percent in the short term and 12.5 percent in the long term. Now investments for a period of more than one year will be considered long term. The second category will include those funds whose holding in debt securities will be more than 65 percent. Marginal rates will be applicable on them instead of short term and long term. No change has been made in this this year.
Long term investors will benefit here
She said in her post that the third category will include those mutual funds which do not fall in the first two categories. These will include gold index funds, gold ETFs, funds of funds investing in equity, international funds and conservative or hybrid funds. These will be taxed at marginal rate in the short term and 12.5% in the long term. Here the long term will be considered as 2 years. In such a situation, if you are a long term investor, then you will get benefits in this category.
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