How debt mutual funds are more tax efficient than bank fixed deposits (FDs)?
1 year, 11 months ago

How debt mutual funds are more tax efficient than bank fixed deposits (FDs)?

Live Mint  

For conservative investors, fixed deposits and debt mutual funds are among the most prominent debt investments. Based on an interview with CA Manish P Hingar, Founder at Fintoo, the spokesperson said “Both Bank Fixed Deposits and Debt mutual funds are suitable for investors with low to moderate risk profiles but a wise choice has to be made between the two considering their liquidity, risks, return, and taxation. From a taxation perspective, Debt mutual funds are more tax efficient than bank fixed deposits. Interest income earned from bank fixed deposits is taxed as per the individual's tax slab, whereas the income from debt mutual funds is taxed based on short-term and long-term Capital Gains. However, considering long-term capital gain taxation and the tax bracket of an individual, debt mutual funds are a better option for investors in the higher tax bracket,” said CA Manish P Hingar.

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History of this topic

Enhancing Investor Returns: A Proposal to Revise Capital Gains Tax for Debt Mutual Funds
6 months, 1 week ago

Enhancing Investor Returns: A Proposal to Revise Capital Gains Tax for Debt Mutual Funds

Deccan Chronicle  

In recent years, the realm of investment has witnessed a surge in the popularity of debt mutual funds as a lucrative avenue for generating steady returns while managing risk. However, amidst the evolving landscape of taxation policies, there arises a pressing need to reevaluate the existing capital gains tax regime governing debt mutual funds. To address this, a proposed revision …

Debt Mutual Funds Not Fixed Deposit, Has Underlying Risks. Hence, It Requires Tax Benefits Like Equity
1 year, 8 months ago

Debt Mutual Funds Not Fixed Deposit, Has Underlying Risks. Hence, It Requires Tax Benefits Like Equity

ABP News  

In a surprising move, debt mutual fund taxation laws were changed abruptly as the Narendra Modi government amended the Finance Bill 2023. Currently, any capital gain on redemption of a debt fund held for three years or longer is treated as long-term capital gain and is taxed at a flat 20 percent with indexation benefit. Any capital gain on redemption …

Debt Mutual Funds Taxation Rules Amended: How Will It Affect Your Investments?
1 year, 8 months ago

Debt Mutual Funds Taxation Rules Amended: How Will It Affect Your Investments?

Live Mint  

When passing the Budget Bill, 2023 in Lok Sabha earlier this week, the central government made amendments to the taxation of debt mutual funds. According to the amendments made in Budget 2023, investments made on or after April 1, 2023, will not be eligible for the indexation benefit for calculating long-term capital gains on debt mutual funds. Due to the …

Government scraps long-term tax benefit for debt mutual funds investing less than 35% assets in equity
1 year, 8 months ago

Government scraps long-term tax benefit for debt mutual funds investing less than 35% assets in equity

The Hindu  

The government has scrapped the long-term capital gains treatment for income from debt mutual funds and other schemes that invest upto 35% in equity shares of domestic companies. “An arbitrage is being created right now where interest income from debt mutual funds is not distributed and converted into long term capital gains of 20%. “The amendment will treat gains from …

Finance Bill proposes removal of tax advantage for debt mutual funds
1 year, 8 months ago

Finance Bill proposes removal of tax advantage for debt mutual funds

Live Mint  

Debt mutual funds, which so far enjoyed taxation benefit as long-term capital gains were taxed at 20% with indexation benefit, stand to lose this advantage from 1 April 2023. 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 …

India Likely to Propose Removing Long-Term Capital Gains for Debt Mutual Funds: Report
1 year, 8 months ago

India Likely to Propose Removing Long-Term Capital Gains for Debt Mutual Funds: Report

News 18  

India may propose that investments in debt mutual funds be taxed as short-term capital gains, according to a source with knowledge of the matter, a move that could strip investors of the long-term tax benefits that made such investments popular. Currently, investors in debt funds pay income tax on capital gains according to the income tax slab for a holding …

Fixed deposit vs debt mutual funds: Which one is better in rising interest rate
1 year, 11 months ago

Fixed deposit vs debt mutual funds: Which one is better in rising interest rate

Live Mint  

Fixed deposit vs debt mutual funds: Amid rising interst rate regime, a good number of Indian banks are offering fixed deposit interest rates to the tune fo 7 per cent or more. Highlighting the income tax benefit available in debt mutual funds, Amit Gupta, MD at SAG Infotech said, "Interest through FDs is taxable according to your tax bracket. On …

Bank FD Vs Debt MF: Here's Where You Should Invest To Save More Tax
2 years, 1 month ago

Bank FD Vs Debt MF: Here's Where You Should Invest To Save More Tax

News 18  

Though investment instruments carry with them financial risks, there are options available in the market for risk-averse investors. Debt mutual funds include credit risk, interest rate risk, inflation risk, and reinvestment risk; while FD risks include liquidity risk, default risk, and inflation risk. According to a livemint report, debt funds have generally shown to have delivered better-annualised returns than FDs, …

Raging retail inflation puts savings plans in disarray
4 years, 1 month ago

Raging retail inflation puts savings plans in disarray

Live Mint  

The unprecedented nature of the covid-19 crisis and economic uncertainty have prompted Indian households to save more during the pandemic, but the raging retail inflationary trends could derail their long-term financial plans. Household financial savings rose from 7.9% of the gross domestic product in Q1FY20 to 21.4% in the three months ended June, while deposits with banks picked up 11% …

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