Union Budget 2019 India: The Budget 2019 has proposed a change in the taxation rules for the fund of funds (FoF). The proposal is to allow the concessional rate of tax for short-term capital gains on the transfer of units of FoF. The Fund of Funds is a mutual fund scheme which invests in other mutual fund schemes but does not directly invest the investor’s money into the assets such as debt securities or equity shares. There are debt FoF as well as equity FoFs and their taxation differs. “Currently all FOFs irrespective of the underlying asset class gets taxed as per debt fund taxation. The concessional short term cap gains is being proposed for certain type of FoF only and not all of them,” says Lakshmi Iyer, Chief Investment Officer (Debt) & Head Products, Kotak Mahindra Asset Management Company.
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