Non-equity funds are defined as funds that have less than 65 per cent in equities. This would also mean that it would include apart from debt funds also gold funds.

The Budget has also increased the long term capital gains tax for non-equity funds from 10 per cent to 20 per cent, which is likely to make investing in debt funds less attractive than in the past. Currently, non-equity funds are taxed at 10 per cent before indexation and 20 per cent after indexation, if sold after one year.

In the case of equity mutual funds there is no change implemented which will now make equity mutual fund schemes more attractive, pushing risk averse investors to also invest in equity mutual funds.

There is no change in the definition of long term capital gains for other asset classes. For example, equity shares would not attract a capital gains tax if the shares are sold one year after their purchase, which would essentially mean long term in the case of shares as a period after one year.

Read how to compute capital gains on shares here

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