Budget hit Debt Mutual fund Market
In this budget, the debt oriented
mutual fund has got tax shock by finance minister. In his budget proposal the
finance minister has proposed to raise long term capital gain to 20% from 10%.
The long term investment period has been defined 36 months now for non equity
mutual funds or debt mutual funds. Before budget, the long term period was 12
months. Stunned by changing in tax rule for non equity funds, the fund houses
has deferred their forthcoming issues and even some fund houses have returned
the money to the investors which they had collected last week.
While interest income on fix deposit
is taxable as per tax slab, returns from debt funds were taxed at 10% if hold
more than 1 year. Now, returns from FMPs and other non equity mutual funds held
for less than 3 year will be taxed as normal tax slab applicable to the
investors.
The worst thing is that according to
finance minister statement, it would be implemented from 1st April, 2014. For
example, if one investor who is in 30% tax slab and invested in 1 or 2 year FMPs
or in debt mutual funds with 10% tax in mind. Now he will be paid 30% tax
instead of 10% if the 1-2 year FMP matured after 2014. One or two year FMPs
schemes have got worst affected.
Now the fund houses and 1-2 years debt
fund investor are looking towards government for some relief statements.
If you want more information
regarding investment or you have any other query about investment feel free to
ask us.
Warm regards,
Arvind Trivedi
Certified
Financial Planner
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