Should you consider international and gold mutual funds after Budget 2024?
gold mutual funds, as well as equity Funds of Funds (FoFs). These changes include a reduced holding period and a revised long-term capital gains (LTCG) tax rate, while the short-term capital gains (STCG) tax rate remains unchanged. This shift has made these investment options more attractive for investors seeking diversification and tax efficiency.
Key Taxation Reforms
Reduced Holding Period: The holding period for equity FoFs, international funds, and gold mutual funds has been shortened from more than 36 months to more than 24 months to qualify for LTCG benefits.
Revised LTCG Tax Rate: The LTCG tax rate for these funds has been reduced to 12.5% for investments held for more than 24 months. Previously, investments held for over 36 months were taxed at 20%. The STCG tax rate remains tied to the investor's income tax slab.
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Impact on Investors
The Budget's adjustments to the tax structure have significantly enhanced the appeal of international and gold mutual funds. The lower LTCG tax rate and reduced holding period mean that investors can achieve favorable tax treatment sooner and at a lower tax rate. This makes these funds more accessible and potentially lucrative for long-term investors.
Pre-Budget vs. Post-Budget Scenario
Before Budget 2024: International funds and gold mutual funds were taxed as STCG at the investor's slab rate if held for less than three years. Investments held for more than three years
