New Delhi: Radhika Gupta, MD and CEO of Edelweiss Asset Management Company (AMC), shared her insights on the changes in mutual funds (MFs) following the Union Budget 2024-25. She confidently stated that the concept of indexation has been removed from mutual funds.
Summarising the changes in mutual funds following the Union Budget 2024-25, Radhika Gupta Edelweiss, MD and CEO of Edelweiss Asset Management Company, said that the concept of indexation had disappeared from mutual funds.
She said that previously, MFs had different taxation categories.
“Some mutual funds were taxed as long term and short term. Some mutual funds were taxed with marginal taxation rates, and some mutual funds had this concept of indexation. With this Budget, all of this gets simplified, and the concept of indexation goes away,” Gupta said in a video posted on X.
There are now three tax types available to MF consumers.
According to her explanation, category one is for equities and mutual funds with more than 65 percent equity. These are subject to capital asset taxes, with short-term rates of 20 percent and long-term rates of 12.5 percent applied to assets held for more than a year.
The second group consists of funds with more than 65 percent invested in debt instruments; they are not differentiated between short—and long-term investments and are taxed at the marginal rate.
“The third category is the one that does not fit into either category, like a gold index fund or gold ETF or could be funds of funds investing in equity funds or an international fund or a conservative hybrid or hybrid fund,” Gupta noted.
These are subject to marginal taxation in the near term and 12.5% in the long term, defined as longer than two years.
“If you are a long-term investor, instead of attracting the marginal rate of taxation, they now attract 12.5 per cent capital gains tax over a two-year long-term,” she said.
Photo: IANS
