The dividend tax exemption available to the equity-oriented mutual funds, however, is withdrawn and the dividends will be taxable in the hands of the recipients at 10 per cent. This move has to some extent reduced the disadvantages faced by the debt-oriented funds.
Second, the recent amendments to Section 47 of the IT Act, facilitating securities lending and borrowing operations will ensure safe and smooth settlement through the recently established CCIL. Third, the prevailing tax treatment for zero coupon bonds resulted in distorting trading practices in these instruments.