MFs and Budget Announcements

Mutual Funds and Budget Announcements

Mutual Funds Investment have been accepted by all types of investors-young and old-as a convenient, popular and gainful mode of creating wealth in the medium and more so, on a long-term basis.    

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The very fact that the number of investors increasing exponentially with an investment corpus o over Rs. 60 Lakh Crores, The ROI through MFs has also been quite profitable, attractive and much better than other types of investments on long term basis. So it is time for you to consider investing in MFs preferably through SIP and Hybrid Funds. For all your MF investments reach Goodwill Wealth Management – a leading MF distributor.

The recent Budget of the finance minister on 23rd July 2024 has brought in sweeping changes in the taxation domain of investments particularly impacting investments in financial and non-financial assets. We will see herein the impact of the changes on MFs.

NOW: According to income tax rules (pre-budget) ,any gain  from sale of units in an equity oriented MF scheme that invests at least 65 %of its corpus in domestic stocks will be taxed as Short-term Capital Gain (STCG) if sold before a year of purchase and as long term Capital Gain (LTCG) if sold beyond a year of purchase.

NEW: According to the new proposals, Equity investors shall enjoy  an additional  Rs 25,000 as Tax-free income in a financial year as LTCG upto Rs 1,25,000  will be totally exempt as against Rs 1 lakh now.

For any gain above Rs 1.25 Lakhs in a financial year derived from Equity oriented Mfs, Investors need to pay LTCG tax @ 12.5 % as against 10 % earlier. STCG tax increased from 15 % to 20 %.In both the cases the rate has been increased but the consolation is that in LTCG the exemption limit is enhanced from Rs. 1 L to 1.25 L.

MFs having investments of more than 6-5 % of the total portfolio are classified as Equity Funds and these changes will apply.

There is no change in respect of debt-oriented funds as far as rate of taxes is concerned.

Another drastic change is the Indexation benefit to off-set the inflation has been totally removed.