The Finance Ministry is examining to tweak the Budget proposal for hiking capital gains tax to 20 per cent for debt mutual funds following representation from the industry, Economic Affairs Secretary Arvind Mayaram said today.
"There have been many representations (on debt MF). We have sent our views to revenue department for examination and consideration," he said.
There have been demands from mutual fund industry for relaxation in the proposal. It has been arguing that those persons who had invested money in debt-oriented MFs prior to the announcement of Budget proposals should not be subjected to higher incidence of tax.
Finance Minister Arun Jaitley in his budget proposals on July 10 had said that long-term capital gains tax on debt-MFs will go up to 20 per cent from 10 per cent. The move is part of government's effort to bring parity with banks and other debt instruments.
Besides the holding period for these units to be eligible for long-term capital gains has been hiked to 36 months from 12 months.
Finance Ministry, according to sources, could extend lower tax rate of 10 per cent to those investors who had redeemed their holding on or before July 10.
Also, the tax department is considering to exempt past investments whose redemptions would be made by March 2015.
"A final call will be taken after weighing the pros and cons," the source had said.
