In a move that could take away the long-term capital gains benefits for a majority of debt mutual fund schemes, one of the key amendments that the government is set to propose in the Finance Bill 2023, is that the taxation of capital gains of investors in debt funds which have 35% or less of their assets under management in domestic equities will be at the slab level, said sources close to the development. Currently, investors in debt funds pay income tax on capital gains according to their income tax slab for a holding period of three years and after that, they are taxed at the rate of 20% with indexation benefits or 10% without indexation.
