Budget 2024: Mutual fund industry urges tax parity for debt MFs held for 3 or more years

economictimes.indiatimes.com:

The mutual fund industry is demanding capital gains tax on the units of debt mutual funds held for more than 3 years to be taxed at 10% without indexation, as applicable in respect of Long Term Capital Gains Tax (LTCG) from debentures.

The demand has been raised by industry body Association of Mutual Funds in India (Amfi), which in its proposal sent to the Ministry of Finance has said that it was «logical» to do so as this could encourage retail investor participation in bond markets. «We request for an amendment to Finance Act, 2023 and consider the mutual fund units as securities, with long-term capital tax rate thereon should be according to / in line with the capital gains tax on bonds, debentures, SDL and G-secs etc,» the Amfi budget proposal document said.

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Among other proposals, a tax parity for the fund-of-funds (FoFs) with their other equity-oriented peers is a wish of the mutual fund industry from the Finance Minister Nirmala Sitharaman who will be presenting her full budget of the Modi 3.0 government on July 23, Tuesday. There is a demand to revisit equity taxation for equity-oriented FoFs as the industry finds the current regime, a challenging one.

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