The finance minister has announced that equity mutual funds will enjoy the same, newly liberalised tax rates as direct equity investments. In his budget proposals on July 8th, he had drastically reduced capital gains taxation for investors who bought and sold equity shares directly. However, these were not available to investments made in equity mutual funds, leaving fund investors at a severe disadvantage.
Now, equity fund gains will be taxed at 10 per cent if the units have been held for less than an year, and will not be taxed at all if they are held for longer periods.
Transaction tax rationalised Mr. Chidambaram also announced that the 0.15 transaction tax will not be levied on trading in bonds. The tax has also been drastically reduced for non-delivery-based equity trades like that done by day traders. This segment will now pay only 0.015 per cent.
These changes fix the most glaring investment-related anomalies in the budget. Value Research will bring you more details and analyses as more information becomes available.
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