Views: Finance Bill 2023

Key Takeaways (proposed to be effective from April 01,2023 onwards):-

Investment in mutual funds (where not more than 35 percent is invested in equity shares of domestic companies) that are bought on or after April 1, 2023, will be taxed as short-term capital gains at applicable tax rates. That is, capital gains from debt funds, international funds and gold funds, irrespective of their holding period, will be taxed at an individual’s relevant applicable tax rate.

• Debt mutual funds held for more than 3 years will no longer enjoy indexation benefit


• Additionally, existing LTCG benefits will continue for investments made on or before March 31, 2023.

Conclusion:

With this change debt funds & traditional investments will now see parity in taxation. The comparison between such opportunities will rest largely on performance. One caveat for existing investors through this news flow remains, that of existing investments in debt funds, international funds and gold funds, and even new investments made in them until March 31, 2023, will not be affected by the proposed amendments. These investments will continue to attract long-term capital gains taxation once they complete 3 years. Investors could revisit their portfolio and reallocate funds towards debt and global funds to optimize their portfolios.

Sources: Finance Bill 2023, Axis AMC Research

About Axis AMC: Axis AMC is one of India’s fastest growing assets managers offering a comprehensive bouquet of asset management products across mutual funds (https://www.axismf.com/), portfolio management services and alternative investments (https://www.axisamc.com/homepage).

Disclaimer: This communication represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s). No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.

The information set out above is included for general information purposes only and does not constitute legal or tax advice. In view of the individual nature of the tax consequences, each investor is advised to consult his or her own tax consultant with respect to specific tax implications arising out of their participation in the Scheme. Income Tax benefits to the mutual fund & to the unit holder is in accordance with the prevailing tax laws as certified by the mutual funds consultant. Any action taken by you on the basis of the information contained herein is your responsibility alone. Axis Mutual Fund will not be liable in any manner for the consequences of such action taken by you. The information contained herein is not intended as an offer or solicitation for the purchase and sales of any schemes of Axis Mutual Fund.

Past performance may or may not be sustained in the future.

Stock(s) / Issuer(s)/ Top stocks, if any, mentioned above are for illustration purpose and should not be construed as recommendation.

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