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How tax changes have transformed debt MF landscape, altered investor choice
Sanjay Kumar Singh Karthik Jerome New Delhi
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The Union Budget 2023 took away the indexation benefit that investors enjoyed on gains from debt mutual funds (MF). This has had far-reaching impact on the category and the investment patterns of investors.
What were the changes to tax rules?
Before April 1, 2023, gains from debt MFs were treated as long-term capital gains (LTCG) if they were held for more than three years. LTCG was taxed at 20 per cent with indexation benefit. If units of debt funds were held for three years or less, the gains were treated as short-term capital gains (STCG) and taxed at the investor's slab rate.
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