Finance Bill 2023 introduced by FM Nirmala Sitharaman has proposed that investments in mutual fund where not more than 35 percent is invested in equity shares of Indian company i.e. debt funds, will now be deemed to be short-term capital gains.
As per the proposal debt funds held for more than three years will no longer enjoy indexation benefit.
No warning, no notice. Govt. wants to milk out citizens.
Every year or two they change the rules, then How ppl will plan their retirement savings.
aache din
High salaried persons used to save a lot using debt funds now rip that plan 
the way its going soon there will be no way u can reduce taxable income u either pay tax or don't no middle ground no tax planning
f
guest_999 wrote:
Yeah. It came out around noon.
More like a way to recapitalise banks. Inflows to FDs would increase substantially.
Jarvis.-. wrote:High salaried persons used to save a lot using debt funds now rip that plan
the way its going soon there will be no way u can reduce taxable income u either pay tax or don't no middle ground no tax planning
How did they save tax?
LightYagami wrote:aache din
Aur anewala hai
Budhe-Baba wrote:How did they save tax?
Debt funds had indexation benefit. That got removed. Not only for high salaried but it was perfect to plan your retirement and child studies as the returns, post tax, were better than FDs. So Asset allocation now would have to be done between equity/FD for most.
Wouldn't matter to those who didn't use debt funds to start with - the returns over 3-4 years (PT) were nothing great.. However, it made huge difference in 7-12 year returns
Ramta_Jogi wrote:What about hybrid MFs?Debt funds had indexation benefit. That got removed. Not only for high salaried but it was perfect to plan your retirement and child studies as the returns, post tax, were better than FDs. So Asset allocation now would have to be done between equity/FD for most.
Wouldn't matter to those who didn't use debt funds to start with - the returns over 3-4 years (PT) were nothing great.. However, it made huge difference in 7-12 year returns
guest_999 wrote:
What about hybrid MFs?
So, anything with over 65 percent allocation to equity is (and was) taxed as an equity MF - 10 percent LTCG and 15 percent stcg that is If you are talking of hybrid equity MF.. They maintain their status quo like before.
However, if you are talking of debt hybrid (usually 50:50 or 35:65 - equity:debt) then that would NOT come under this new rule starting Apr 1
Mutual funds having more than 35% but less than 65% equity, eligible for indexation and to be taxed at 20%.
Just to add to info - this removal of indexation applies to some other funds too like Gold MF and International MFs.
Budhe-Baba wrote:Say someone belongs to 30% tax bracketHow did they save tax?
Ramta_Jogi wrote:Any updates on International ETFs ? as well as International stocks (non-ETF) ?
Just to add to info - this removal of indexation applies to some other funds too like Gold MF and International MFs.
Ramta_Jogi wrote:Debt funds had indexation benefit. That got removed. Not only for high salaried but it was perfect to plan your retirement and child studies as the returns, post tax, were better than FDs. So Asset allocation now would have to be done between equity/FD for most.
Wouldn't matter to those who didn't use debt funds to start with - the returns over 3-4 years (PT) were nothing great.. However, it made huge difference in 7-12 year returns
Actually hni and corporates benefited a lot due to this indexation benefits.
Many quid pro que deals also happened where corporates issued bonds and same corporate invested same amount back and shown zero taxable income.
Actually these groups are like our cc Rotators. They missuse system so much that govt plugs that loophole affecting every one.
Jarvis.-. wrote:
Yes, on an average.. governments prefer to go for the low hanging fruit
and
'robbing Peter to pay Paul' methodology of managing fiscal deficits and executing populist measures.
.
LTCG (benefit) is all but a relics of the past, in the times to come.
Ramta_Jogi wrote:@kukdookooSame as debt MFs. The full extent of 20 percent LTCG with indexation benefits has been done away with.
Noob query
Can we utilize this week to invest in debt funds as this will be applicable from 1st apr?
BAT_MAN wrote:Noob query
Can we utilize this week to invest in debt funds as this will be applicable from 1st apr?
yes, any investment in debt funds before 1st April 2023 will be eligible for old tax regime.
But don't try on 31st , in case there is a lag, units should be credited on or before 31st March
BAT_MAN wrote:Noob query
Can we utilize this week to invest in debt funds as this will be applicable from 1st apr?
Yes.
LightYagami wrote:yes, any investment in debt funds before 1st April 2023 will be eligible for old tax regime.
But don't try on 31st , in case there is a lag, units should be credited on or before 31st March
Any suggestion for medium term? Was looking for debt fund from last few month..
Now i have to do it
@Ramta_Jogi
@Bk100
@kukdookoo
@InvestPotato
BAT_MAN wrote:Any suggestion for medium term? Was looking for debt fund from last few month..
Now i have to do it
@Ramta_Jogi
@Bk100
@kukdookoo
@InvestPotato
I am not into debt funds. Only bank FDs and equity funds (domestic and international) along with PPF and NPS.
BAT_MAN wrote:Any suggestion for medium term? Was looking for debt fund from last few month..
Now i have to do it
@Ramta_Jogi
@Bk100
@kukdookoo
@InvestPotato
Don't have much expertise in debt funds. So can't able to recommend anything. Consider ppf instead of bond funds if you planning for long term as post tax returns are superior here.
BAT_MAN wrote:Any suggestion for medium term? Was looking for debt fund from last few month..
Now i have to do it
@Ramta_Jogi
@Bk100
@kukdookoo
@InvestPotato
P. S - I suggest you look at arbitrage funds after exhausting ppf. These funds give equivalent returns of debt funds and treated as equity funds in taxation.
https://www.moneycontrol.com/mutual-funds/perfo...
Have you checked these funds @Ramta_Jogi
guest_999 wrote:
@kukdookoo
Multi asset funds too would be repositioned this way soon.
Bk100 wrote:P. S - I suggest you look at arbitrage funds after exhausting ppf. These funds give equivalent returns of debt funds and treated as equity funds in taxation.
https://groww.in/mutual-funds/category/best-arb...
Have you checked these funds @Ramta_Jogi
No. I haven't.
I feel more at ease keeping money in FD. I need instant liquidity.
BAT_MAN wrote:Any suggestion for medium term? Was looking for debt fund from last few month..
Now i have to do it
@Ramta_Jogi
@Bk100
@kukdookoo
@InvestPotato
Check bharat bond 2025 yield is above 7% and being a fixed maturity fund if u hold till maturity u'll get that 7% above return (in theory), to get indexation benefit of this last week u need bharat bond 2026 or above though
Ramta_Jogi wrote:No. I haven't.
I feel more at ease keeping money in FD. I need instant liquidity.
You will get amount with in 3 days of redemption just like equity mutual fund. So liquidity is not a issue here. After 1 year your redemption will be treated as long term capital gain and exempted up to 1 lakh.
Jarvis.-. wrote:Check bharat bond 2025 yield is above 7% and being a fixed maturity fund if u hold till maturity u'll get that 7% above return (in theory), to get indexation benefit of this last week u need bharat bond 2026 or above though
I think this also lost indexation benefits with latest amendment. Or is it spared.?
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He invests in fd @ 7% interest for 3yr
Total return after 3 yr ~22%
Tax on that @ 30% = 6.6%
Net return from fd in 3yr = 15.4%
Now, instead of fd he invests in debt fund for 3yr @ 7% yield (fixed maturity product)
Total return after 3 yr ~ 21%
Indexation benefit = 18% ( assuming 6% inflation)
Tax @ 20% on rest = (21-18)*0.2 = 0.6%
Net return from debt in 3yr = 20.4%
No warning, no notice. Govt. wants to milk out citizens.
Every year or two they change the rules, then How ppl will plan their retirement savings.
Yeah. It came out around noon.
More like a way to recapitalise banks. Inflows to FDs would increase substantially.