Govt removes 20% TDS on repurchase of units by mutual funds, UTI

According to Feroze Azeez, Deputy Chief Executive Officer, Anand Rathi Wealth, the withdrawal of the 20 percent TDS rate on mutual fund unit repurchase marks a step towards easing the tax burden for investors.

“This aligns with the overall budget's focus on inclusive growth, employment generation, and infrastructure development, aimed at creating ample opportunities and fostering a resilient economy,” he said.

Also read | Gold funds, overseas funds, FoFs big beneficiaries of capital gains tax changes

According to S Vasudevan, Executive Partner, Lakshmikumaran & Sridharan, pursuing the agenda of simplification and ease of doing business, finance minister has announced a comprehensive review of the Income Tax Act, 1961 within next 6 months.

“As an immediate measure, the budget has proposed simplifying the tax structure for charities, rationalizing tax rates for TDS & Capital Gains, simplifying provisions related to reassessment and decriminalization of certain offences for TDS,” said Vasudevan.

Meanwhile, the Union Budget for 2024-25 has hiked the long-term capital gains tax (LTCG) on all financial and non-financial to 12.5 percent from 10 percent, while short-term capital gains tax (STCG) on some assets would be 20 percent.

Also read | Long term capital gains tax hiked from 10% to 12.5% in Union Budget

Further, the exemption limit for long-term capital gains tax has been increased to Rs 1.25 lakh from Rs 1 lakh. The budget also announced that listed financial assets held for more than a year will be classified as long-term.