Ch.8 · Capital Gains Tax on Mutual Funds · medium
What is 'indexation benefit' and to which mutual fund category was it available?
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EXPLANATION
Indexation adjusts the purchase cost upward using the Cost Inflation Index (CII) to account for inflation between purchase and sale year. This reduces taxable capital gains. For example, if CII rose 40% during the holding period, the indexed cost is 1.4× the original cost, reducing taxable gain. This benefit was available for debt fund LTCG until March 31, 2023 but was removed from April 1, 2023.
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