Following a thorough analysis prompted by the thread we have concluded that ETFs fall within the category of Mutual Fund products. Consequently, the tax treatment for Debt ETFs aligns with that of Debt Mutual Funds.
After the amendment, it can be summarized as below:
Tax for Debt Mutual Fund & Debt ETFs (Bought on or after 01.04.2023) - Irrespective of holding period: Taxable at slab rate.
Tax for Debt Mutual Fund & Debt ETFs (Bought before 01.04.2023) -
STCG: Taxable at slab rate (Held up to 36 months)
LTCG: Taxed at 20% after indexation benefit. (Held more than 36 months)
(am sure everyone is thinking this. i will go ahead and say it…)
@Quicko i would like to take this opportunity to request you
to kindly refrain from responding on this forum…
…without having all the facts at hand
…without researching the topic properly.
I recall multiple topic-threads on TradingQnA where
either you misunderstood the question,
or missed a key relevant fact posted in the question,
or had no idea about the relevant rules/laws,
and provided incorrect guidance
only for someone else on the forum to catch that and correct it.
While individuals (including me) can afford to be wrong once in a while (and learn in the process),
you (as someone offering financial consultation services) have a higher bar to clear.
Please ensure that all the individuals managing the @Quicko social-media account on this forum (and other such social media) do NOT take this responsibility lightly and post half-assed, ambiguous, and often downright incorrect responses. Only to flip-flop later upon being questioned/cornered.
This is hurting your image.
Currently, my perception of your competence is very low.
The same as the other charlatans claiming to offer similar taxation and financial consultation online in India,
but are simply running online websites as a front for body-shops of unqualified CAs.
I sincerely hope that it is not the same case with Quicko.
The dividend received from Liquid ETFs will be taxed per your applicable slab. As most liquid ETFs invest in short-term debt instruments, the tax will be applicable as per the slab regardless of the holding period when you sell these units.
I think new rules suggest it will be taxed as per slab rates . But broker tax pnl report still show it as short term or long term gains. I wonder if the tax paying investors wrongly calculate their tax liability by multiplying bharat bond profits by 15% (STCG) or 10% (LTCG), what would be implications of that.
The people in lower income slab would end up paying more tax accidentally and the one on higher slab brackets may incur penalty for wrongly reporting income.
Yes it is still a capital gain, and needs to be shown as such in ITR.
ITR 2 has specific section for reporting Equity capital gains and for other capital gains. Debt capital gains needs to be shown in relevant sections and tax on it will get automatically computed correctly.
Definition of capital gains have not changed and remain same. Only Tax rate on debt capital gains have changed.
