Budget 2023 ended tax advantage in market-linked debentures (MLD). Starting FY24, returns from such listed debentures will be taxed as short-term capital gains versus long-term capital gains and also it will be taxed at the investor slab versus 10 percent currently.

Feroze Azeez, Deputy CEO at Anand Rathi Wealth speaking to CNBC-TV18 announced that the company is starting a separate tax vertical to provide holistic advice on taxation for HNI's (high net worth individuals). He emphasized the importance of using this opportunity to provide comprehensive and effective advice in this area.

Azeez said, “The effective tax rate even if unlisted MLDs accounted for the full portfolio, which we run is 14 percent taxed, effective tax rate. In fact, it becomes a huge business opportunity for us because we are now going to be starting a separate tax vertical, just like we have the Estate Planning Division and the Ring Fencing Division, we are going to start taxation services.”

He added, “The point is Anand Rathi Wealth LTD wants to use this huge opportunity to holistically advise people or at least give an opinion on the taxation side, especially to Rs 10 crore plus clients.”

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Despite the recent announcement that these securities will be taxed under capital gains, Azeez emphasized that the attractiveness for listed MLDs should not decrease, as the investor's effect will be negligible.

Azeez said, “Prima facie to our mind the debentures which are unlisted are not covered. Point one, because the principle is don't protected that is one. Second coming to your pointed question, will the attractiveness of listed MLDs come down? To my mind, it should not come down dramatically.”

Talking about the spilt that they currently hold Azeez highlighted that equity mutual funds of their total assets are 48 percent, 12 percent is debt mutual funds, and 29 percent MLD. He also mentioned that they don't want to make any changes in this mix.

Watch the video for more.

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