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AMFI has requested the finance ministry to revisit its tax proposals on mutual funds announced in the recent Union Budget 2024.
Earlier, the FM had proposed an increase in short term capital gains tax and long term capital gains tax across equity funds and hybrid funds while taxing debt funds at the marginal rate of taxation irrespective of holding period.
Here are some key requests of the AMFI:
Debt funds
- Reintroduction of indexation benefits in debt funds
- Insert grandfathering clause in debt funds i.e. allowing existing debt funds to get the benefits of indexation on MF units acquired till July 23, 2024
- Recognize FoFs investing over 90% of corpus in a scheme investing over 65% in debt and money market instruments as specified mutual funds under Section 50 AA. Also, instead of implementing it from April 1, 2026, these proposals should be effective immediately to provide clarity to investors
- Further, the taxation of debt funds should be in line with listed bonds, which are currently taxed at 12.5% as LTCG for holding period of over 12 months
Equity funds
- Reinstate taxation of equity funds at earlier rate i.e. STCG on equity funds should be taxed at 15% while LTCG rate should be 10% on gains exceeding Rs.1 lakh
Arbitrage funds and equity savings funds
- Reinstate the Securities Transactions Tax (STT) levied on futures & options (F&O) to their earlier rates to reduce the costs on arbitrage funds and equity savings funds that use F&O for hedging
