How to invest this 1 crore to get maximum trading margin from pledging?

[trendtrade]

No more LTCG benefit for debt/gold/international funds/Fund of funds

As per many reports, Starting April 1st, 2023, Mutual fund investments having not more than 35% invested in equity shares of an Indian co (every other MF excluding equity oriented MF) to be deemed short-term capital gains

That means the indexation benefit is lost for all the Debt/Gold / International funds / FoFs going forward once the amendments are passed in the parliament later today.

If all gains from debt mutual fund schemes are treated as short-term, they would be taxed as per slab rate. So, individuals in the highest tax bracket would pay a tax of 30% on such gains.


This type of Indexation benefit is gone now -
"Indexation is an advantage in which if your fund generates 8% return over 3 years and inflation in the same period was 6%, you pay a 20% tax on the difference 8-6 = 2%. So a total tax of 2*20% = 0.4% making your post tax at 8-0.4 = 7.6%,” he tweeted.
https://economictimes.indiatimes.co...mutual-funds-may-go/articleshow/98957945.cms?

31 March 2023 is the last date, if anyone wants to get such Indexation Benefits.

@travi bhai, what's your view on this?

 

[travi]

No more LTCG benefit for debt/gold/international funds/Fund of funds

As per many reports, Starting April 1st, 2023, Mutual fund investments having not more than 35% invested in equity shares of an Indian co (every other MF excluding equity oriented MF) to be deemed short-term capital gains

That means the indexation benefit is lost for all the Debt/Gold / International funds / FoFs going forward once the amendments are passed in the parliament later today.

If all gains from debt mutual fund schemes are treated as short-term, they would be taxed as per slab rate. So, individuals in the highest tax bracket would pay a tax of 30% on such gains.


This type of Indexation benefit is gone now -
"Indexation is an advantage in which if your fund generates 8% return over 3 years and inflation in the same period was 6%, you pay a 20% tax on the difference 8-6 = 2%. So a total tax of 2*20% = 0.4% making your post tax at 8-0.4 = 7.6%,” he tweeted.
https://economictimes.indiatimes.co...mutual-funds-may-go/articleshow/98957945.cms?

31 March 2023 is the last date, if anyone wants to get such Indexation Benefits.

@travi bhai, what's your view on this?

Nothing really changes bcos there is NO alternative for debt funds. More tax thats all.
Its not like advantage for one group over another. Applies to all.

Such changes are not in our hands, they just level the playing field with FDs. Good for the banks, seems like they were losing out.

FD cant be pledge, one continues with Growth debt funds so
1) they can be pledged for margin (FD cant). We need to generate extra return with margin
2) Tax liability can be deferred until you actually sell the holdings (FD income is included per year irrespective of tenure)
3) This rule applies for new purchases so it doesn't imbalance the near term like 2yrs or so bcos corpus is already deployed. Old holdings will have indexation when sold

For non-debt funds like international/FOF etc i dont know bcos i dont have any but I dont think it changes anything. If you have to buy Gold, you have to.
I wont be amused if down the line the old tax regime( 80C etc wala) is scrapped.

 

[timepass]

Nothing really changes bcos there is NO alternative for debt funds. More tax thats all.
Its not like advantage for one group over another. Applies to all.

Such changes are not in our hands, they just level the playing field with FDs. Good for the banks, seems like they were losing out.

FD cant be pledge, one continues with Growth debt funds so
1) they can be pledged for margin (FD cant). We need to generate extra return with margin
2) Tax liability can be deferred until you actually sell the holdings (FD income is included per year irrespective of tenure)
3) This rule applies for new purchases so it doesn't imbalance the near term like 2yrs or so bcos corpus is already deployed. Old holdings will have indexation when sold

For non-debt funds like international/FOF etc i dont know bcos i dont have any but I dont think it changes anything. If you have to buy Gold, you have to.
I wont be amused if down the line the old tax regime( 80C etc wala) is scrapped.

Scrips like PNB Gilts etc. will end with lower profits, right ?

 

[travi]

Scrips like PNB Gilts etc. will end with lower profits, right ?

the initial reaction in mkt was AMCs taking a hit, but mkt will work it out at some point in time. In eg of gold, FoF, intl funds etc there is no alternative.

Bcos removing indexation doesnt change many things depending on the needs.
It is not like ppl will switch to FDs. Earlier this year, ppl were breaking old FDs and re-opening new ones with higher rates too.
What is will do though, is to reduce jumpers from FD to debt MF.
And most diff is only for the highest tax slab, lesser impact for lower slabs.