• UGI USER
  • Jul 12, 2024
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RETHINK TAX ON DEBT-ORIENTED MUTUAL FUNDS: AMFI

Why in the news?

  • The Association of Mutual Funds in India (AMFI) has urged the Finance Ministry to reconsider the short-term capital gains tax introduced last year on debt-oriented mutual funds with equity exposure up to 35%.

Proposed Amendments

  • AMFI suggests aligning Section 50AA tax treatment for debt-oriented mutual funds with government securities.
  • Government securities’ gains over three years taxed at 10%, listed debentures’ period cut to 12 months
Source: Slideshare

About Mutual Funds:

  • Investment Vehicle: Mutual funds pool investor funds to invest in equities, bonds, government securities, gold, and more.
  • Asset Management Companies (AMCs): Qualified companies create AMCs to manage investments, market mutual funds, and facilitate transactions.
  • Professional Management: Fund managers, experts in investment analysis, manage the pooled funds according to the fund’s objectives.
  • Expense Ratio: AMCs charge an expense ratio for fund management, which varies by mutual fund and is regulated by SEBI.

 

Debt Mutual Funds/ Debt Oriented Mutual Funds

  • Low Risk: Debt mutual funds typically carry lower risk and offer moderate returns.
  • Variety: There are 16 subdivisions within debt mutual funds, including government and corporate bonds.
  • Fixed Income: These funds invest in debt instruments that provide stable income, making them suitable for risk-averse investors.

Associated Article:

https://universalinstitutions.com/investment-models/