After the reduction in the repo rate on Friday, the possibility of increasing the possibility that may start a cut in interest rates on bank deposits in the coming days. However, it is very low in Near-Term. Experts believe that the position of banks on the deposit front is still not much better, so they will not want to cut the deposit rate till the April policy. Despite this, those investing in FD should not be delayed. If they are excited about investment in term deposits, then they should immediately FD for different periods. If the investment duration is not more than 2-3 years, then date funds can also be a better option for them.
However, after the changes in tax rules related to date funds after 1 April 2023, many people are confused that they are similar to FD in terms of tax rules.
From 1 April 2023, neither the Capital Gain (Capital Gain) of Debt Mutual Fund is getting the benefit of neither Long-Term Capital Gain nor Indexation. That is, after redeeming the date mutual funds, the tax pair will have to pay tax according to its tax slab on whatever capital gains will be done. Broadly, the same is with fixed deposits i.e. FD. The interest you get on FD also connects your income and you have to pay tax on your tax slab. but it’s not like that. Still a lot of tax rules are different for FD and Debt Mutual Fund.
Therefore, today let’s talk about those rules so that investors can be easy to make decisions and they do not remain in dilemma.
According to the new provisions proposed in Budget 2025, 10 % TDS (TDS) will be payable on the interest amount of more than 50 thousand (this limit for senior citizens) annually on FD, provided you 15G Or 15H Do not fill the form by filling the form. The proposed changes in the budget will be effective from 1 April 2025. Whereas there is no provision of TDS on the capital gains that occur after the redemption of the growth scheme of date mutual funds.
According to the current provisions, 10 % TDS (TDS) is deducted on the interest amount of more than 40 thousand annuals on FD (this limit for senior citizens). If you invest in term deposits by 31 March 2025, then only the current rules of TDS will be applicable.
If you have invested money in the dividend plan of Date Mutual Fund (Debt Mutual Fund), then according to the new provisions, if the annual dividend is more than 10 thousand rupees, then the Asset Management Company will deduct 10 % of the dividends you give to you. The provisions will also be applicable from 1 April 2025. According to the current rules, TDS is deducted at a dividend of more than 5 thousand rupees annually.
Whatever interest is received on FD, you have to pay TDS every quarter, even if interest is not credited in your savings account. Especially on cumulative FD where interest is available with the amount of maturity. This is not the case with date mutual funds.
You have to pay tax according to your tax slab on the capital gains in the financial year during the financial year you redeem during the financial year. At the same time, the dividend you will get in the dividend plan of date mutual funds will be added to your income and you will have to pay tax on it according to the tax slab.
There is no talk of loss on FD. But you cannot set-off the capital loss from the sale of any other asset from the interest on FD.
On the other hand, if you lose (disadvantage) from investing in Debt Mutual Fund during a financial year, then during the same financial year, you have both short-term and long-term capital gains from other capital assets during the same financial year You can set-off.
If the capital loss is left even after adjustment in a financial year, then the loss of that loss from the next 8 financial year, you set-off with both the short-term and long-term capital gains from other capital assets. Can do
But if you have got a capital gains from the rediston of date mutual funds and you want to set-off this capital gain from the los from other assets, then you should take care-if you short from the sale of another asset if you short -Term is capital loss, only then you can set it to set it with a capital gains caused by date mutual funds.
But if you have a long-term capital loss from the sale of an asset, then you cannot set it off with a capital gains caused by a date mutual fund. Meaning long-term capital gains can be set-off from long-term capital loss.
One thing and the set-off of damage caused by the sale of an asset is necessary that for the financial year you have been damaged, you file income tax returns within the time limit and mention the loss in it.
Basic exemption limit (Basic Exemption Limit) From you can adjust the interest received on FD. But you cannot adjust the short-term capital gains from date fund redemption to the basic exercise limit.
On the interest received on the FD, you can take advantage of the rebate under Section 87A of the Income Tax Act, 1961. But you cannot take advantage of the rebate under 87A on the short-term capital gains that are redeeming the date fund. For example, assume a taxable income of a person (age 60 years) during the financial year 2024-25, while he got a capital gain of Rs 1.5 lakh from the rediston of date mutual funds.
In this case, taxable income even after mixing capital gains (Rs 2 lakh + Rs 1.5 lakh = 3.5 lakh rupees) 5 Lakh/7 Lakh Money Less than, so many people may feel that tax liability will not be made under both taxes. but it’s not like that. Under both new and old tax system, taxpayers will have to pay 5 percent tax on capital gains of Rs 1.5 lakh. That means the rebate will not get the benefit under section 87A on a capital gain of Rs 1.5 lakh.
(According to the new budget proposals, if your annual income is less than Rs 12 lakh, then you will get a rebate of 60 thousand rupees for income of 4 lakh to 12 lakhs under 87A. Meaning financial year 2025-26 under New Tax Regies No tax will have to be paid on income up to Rs 12 lakh.)
According to the new rule implemented from 1 April 2023, after redeeming the date funds (by redeeming the date funds in the same mutual funds where the exposure is not more than 35 per cent) Tax will have to be paid accordingly. Whereas before 1 April 2023, the earnings from such funds were imposed on the basis of tax holding period (from the day of purchase to the day of selling).
Meaning there was a provision of short-term capital gains tax on a holding period of less than 36 months while on holding period above 36 months with the advantage of indexation (20.8 per cent) of long-term capital gains tax.