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Tax on debt mutual funds bought after April 2023

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Gains on specified mutual funds, mainly debt funds with 35% or less in equity, bought on or after 1 April 2023 are treated as short term whatever the holding. They are taxed at your slab rate. Funds bought earlier follow the normal holding rules.

Provisions

Sec 50AA (now Sec 76); Sec 2(42A) (now Sec 2(101))

Analysis

Sec 50AA (now Sec 76) deems these gains short term, so a ₹60,000 gain is added to your income and taxed at, say, 30% plus cess, about ₹18,720. Debt fund units bought before 1 April 2023 and held more than 24 months are long term and, for transfers after 23 July 2024, taxed at 12.5% without indexation. Your fund statement should show purchase dates to split them. Report them in the right part of Schedule CG.

Close

  1. Check purchase dates of each debt fund unit.
  2. Treat units bought from 1 April 2023 as short term at slab.
  3. Treat older units by holding period.
  4. Report each in the right row of Schedule CG.

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