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Budget 2020 – The Impact on Mutual Fund Industry

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Budget 2020 Impact on Mutual Fund Industry

Budget 2020 announcements have some severe bearing on how we will be strategizing to reach our financial goals through the platform of our investment(s). Although, Budget is quite tagging along to have a far reaching impact on investments in mutual funds for many reasons. While there are some announcements made by Finance Minister which are being welcomed by mutual fund investors, there are some firm decisions that might have a negative impact. Let’s take a closer look at budget 2020 that had an impact on the mutual fund industry. Here: 

  • New Tax-regime: New tax slab brings in a positive vibe for mutual funds investments as budget 2020 introduced a brand new tax-system effective from financial year 20-21 where tax-payers can benefit from lower slab-rates by forgoing a major of tax-deduction benefits for lowering their tax-burden. NOTE: Tax-payers will be having an option to continue with existing tax-system too. But the new tax-slab would allow tax-payers to invest freely without worrying about tax-saving; they can now explore mutual funds that necessarily don’t save taxes. No need to get stuck with a lock-in-period of 3 years. Invest in mutual funds freely.  
  • Tax Deduction SourceTDS seems out to be a negative for mutual fund investments as budget 2020 has proposed 10% on the dividend income above INR 5000 before distributing to the investors. Now, if the investor comes under the higher tax-slab, they will adjust the TDS payment from their tax-obligation whilst tax-filling the tax returns; on the other hand, an investor falling in a low tax slab might need to claim the TDS refund by filling their tax-return.  
  • DDT is a Mixed ImpactAt existence, the dividend on equity mutual & debt funds are taxed at 11.65% & 29.12% while distributing to the shareholders. But, in Budget 2020, it’s been proposed to levy DDT under the hands of the mutual fund investors (as per their tax-rate).  

On That Note: Time to make a choice of investing in the best way by investing in direct mutual funds. Sign up at www.gulaq.com to explore funds according to your investment goals, risk-appetite, returns, and horizons.  

*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.

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