The Lok Sabha on Friday, March 24, passed the Finance Bill, 2023 with some amendments. Union Finance Minister Nirmala Sitharaman tabled ‘The Finance Bill, 2023’ in the lower house amid sloganeering by Opposition MPs demanding a JPC inquiry into the Adani Group issue. FM Sitharaman said that a committee will be set up under Finance Secretary on the pension system to address the needs of employees and also maintain fiscal prudence.
The Finance Bill has proposed some amendments. One such amendment is investments in mutual funds with up to 35% equity exposure to domestic companies, essentially debt funds, are liable to be taxed as per the investors’ income tax slab rate.
This brings the taxation treatment for debt funds on a par with any other bank fixed deposits, where the capital gains are added to the investor’s income and taxed at his or her slab rates.
So, now an investor regardless of his or her holding period in a debt mutual fund (previously, LTCG was applicable after three years), will be taxed as per his/her slab. If the investor falls under the highest income tax slab rate of 30%, then he or she will have to pay 35.8% (including surcharge and cess) on their gains without any indexation benefit.
