In the 2014 budget the government increased the holding period of an FMP to 3 years to get long term capital gains benefit. It was also announced by FM in July that funds maturing before budget will get earlier benefit of 1 year period and the changes will not be retrospective. Now I would like to know what is the fate of FMPs which have matured prior to budget in this financial year? Has government issued any orders in this respect?
- Shrinivas Waishampayan
The redemption proceeds on FMPs which matured prior to July 10, 2014 will be taxed as per the old taxation norms. That is, their NAV based returns, if held for 12 months or more will be treated as long term capital gains and taxed at 10 per cent.
However, for debt funds that are redeemable after July 10 2014, new tax rules will apply. The period for determining long term capital gains will be 36 months in their case.