What will be the tax treatment for the one-year FMPs which are being rolled over for 2 more years? Will they be treated as two different FMPs, one with maturity period of 1 year and another with a maturity period of 2 year? Or will they qualify as a single FMP for a 3 year period so that they are eligible for Long Term Capital Gains tax with indexation benefits as per Budget 2014?
- Santosh Bilaney
Asset Management Companies have extended the tenures of their existing FMPs only in order to ease investors of the tax burden arising from the recent changes on capital gains tax. Therefore the extended FMPs will remain a single investment and capital gains arising from them will be treated as long term capital gains, once the FMPs complete three years from the original date of investment.
As per the new guidelines, short term capital gains from FMPs earned within 36 months, would be added to your income and taxed according to the applicable slab rate. Whereas, long term capital gains would be taxed @ 20% after providing for indexation.