Mutual funds
Asset management companies, or AMCs, will not be pleased.
In a surprise move, the finance minister has increased long-term capital gains tax on debt mutual funds from 10% to 20%, while the holding period has been increased from 12 months to 36 months.
That means the tax break for long-term capital gains will happen only on 3-year holdings. So if you sell before this period, you are liable for short-term capital gains tax, which is taxed at your income level.
Investors may now gravitate towards bank fixed deposits.
Next: Foreign Direct Investment
