Budget impact: Govt may use MF route to meet disinvestment target

FoF are subject to higher short-term capital gains tax, given these are not treated as equity-oriented schemes for taxation purpose

mutual funds
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The proposals in the Union Budget hint that the government will use the mutual fund (MF) route more aggressively to meet this year’s Rs 1-trillion-plus disinvestment target. It has proposed tax exemptions to exchange traded funds (ETFs) that have central public sector enterprises (CPSEs) as the underlying. These ETFs will get the status of equity-linked savings schemes (ELSS). Additionally, the Budget has proposed extending the concessional tax rate of short-term capital gains to equity-oriented fund of funds (FoF) that are set up for disinvestments in state-owned companies or ...