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    AMFI seeks tax parity for debt funds, fund of funds

    Synopsis

    The Association of Mutual Funds in India has proposed tax changes for debt-oriented mutual funds and fund of funds in the Union Budget. They recommend a 10% tax rate without indexation, introduction of a debt-linked savings scheme, and a revision of the definition of equity-oriented funds.

    AMFI seeks tax parity for debt funds, fund of fundsTIMESOFINDIA.COM
    The Association of Mutual Funds in India (AMFI), in its Union Budget proposals, has sought that capital gains on redemption of units of debt-oriented mutual funds held for more than three years should be taxed at the rate of 10% without indexation, as applicable in the case of debentures.

    The mutual fund industry body also has proposed the introduction of a debt-linked savings scheme (DLSS) providing tax benefits similar to the current ELSS scheme.

    AMFI has proposed that the definition of equity-oriented funds be revised and include fund of funds (FoFs) that invest at least 90% of their corpus in units of equity-oriented funds. Equity oriented mutual fund schemes which in turn invest minimum 65% in equity shares of domestic companies listed on a recognised stock exchange.

    This move will ensure parity in tax treatment for FoFs investing in equities. Currently, FoFs which invest in equity-oriented funds, are treated as debt instruments for taxation.

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