Budget 2026 may hit corporate investments in mutual funds
Business
The Union Budget 2026 has proposed to amend section 93(2) to disallow companies from claiming tax deductions on interest paid for loans used to invest in mutual funds.
Experts say any income from these funds would be taxed at 25% under "income from other sources," and, if the proposal is enacted, there would be no way to offset it.
Higher taxes, less flexibility for companies
This move means higher taxes and less flexibility for companies that park surplus cash or borrowed money in mutual funds.
Experts worry it could discourage corporate investing and make things more complicated, as firms may have to prove their investments came from profits, not loans.
The new rule could also spark more legal battles over how companies handle their finances.