Previously, some of these funds were taxed at the investor’s slab rate, which could be as high as 30%. However, with the latest changes, the long-term capital gains (LTCG) tax on these funds has been drastically reduced to just about 12.5%, offering a substantial tax advantage.
Given this development, CNBC-TV18 spoke with Mohit Gang, CEO of Moneyfront, and Devendra Singhal, Executive VP and Fund Manager at Kotak AMC, to understand the impact of these changes on investment strategies amidst market volatility and the need for risk diversification.
According to Mohit Gang, those investing in international funds, balanced hybrids, conservative hybrids, multi-asset funds, gold funds, and fund of funds, stand to gain a lot from the new tax structure.
He further highlighted the streamlined tax regime, noting, “Now there are only two holding periods, which are 24 months and 12 months. The budget has done away with the 36-month holding period and the indexation. But what the budget has done brilliantly is made the tax rates uniform. So, there is an extreme amount of clarity and simplicity now. All these categories now get classified as long term after two years and get taxed at 12.5%.”
Singhal echoed Gang’s sentiments, noting the positive feedback from investors. “Investors in general have nothing to complain about, especially the mutual fund investors. The hybrid fund investors are on a sweet note here because now it reduces the complexity, it simplifies the tax structure, and it reduces the holding period, which is a big advantage for the investors.”
Watch the video for more
