Budget 2019: Key Tax Proposals And Their Impact

As far as any revision in income tax slabs and income tax rates is concerned Budget 2019 has maintained the status quo.

- Sanjiv Puri

However, there are few proposals that may still be of interest to the taxpayers in not only making their tax life easier but also giving them more options to choose tax-saving investments or even save more tax.

Here are few of those proposals, the existing tax laws, their impact and what you as a taxpayer may do:

Tax benefit on Fund of Funds

Budget 2019 has proposed a change in the taxation rules for the fund of funds (FoF). The proposal is to allow the concessional rate of tax for short-term capital gains on the transfer of units of FoF. The Fund of Funds is a mutual fund scheme which invests in other mutual fund schemes but does not directly invest the investor’s money into the assets such as debt securities or equity shares. There are debt

FoF, as well as equity FoFs and their taxation, differs. Currently all FOFs irrespective of the underlying asset class gets taxed as per debt fund taxation. The concessional short-term cap gains are being proposed for certain type of FoF only and not all of them. Budget 2019 has proposed to tax equity-oriented FoF as that of equity fund’s STCG rate i.e. at a concessional rate of 15 percent. The Budget document states, “It proposed to amend section 111A so as to extend the concessional rate of tax for short-term capital gains in respect of the transfer of units of such (equity-oriented) fund of funds.”

CPSE ETF to get similar tax benefits as ELSS