New Delhi, Oct. 3 -- Debt mutual funds primarily invest in fixed-income securities such as government and corporate bonds, debentures, commercial papers and certificates of deposit. These less-risky funds are generally preferred by conservative savers and retirees seeking stable, fixed-income returns with high liquidity.

For tax purposes, mutual fund schemes that invest at least 65% of their assets in debt and money market instruments are classified as debt-oriented mutual funds. However, the tax treatment of profits made from these investments can depend on when the units were purchased.

The Union Budget 2023 announced major changes in the tax treatment of debt mutual fund gains for units bought on or after April 1, 2023.

As per the n...