Debt investors should now make some changes in investment plans after the Budget to maximise their returns and make them more tax efficient. According to investment consultants, dividend options of short-term bond funds are not more attractive as compared to fixed deposits. It is time to increase exposure to long-term gilt funds.
"It is time to invest in longterm gilt funds with 12 to 18 months time frame and move out of the dividend option of debt funds due to increase in dividend distribution tax," says Vikram Dalal, managing director, Synergee Capital Services. The finance minister has raised the dividend distribution tax ( DDT) for debt funds to 25% from 12.5%, making them tax unfriendly. finance minister's promise on containing the fiscal deficit at 5.2% has given hopes to a possible rate cut by the Reserve Bank of India (RBI) in the near term.

Source - http://economictimes.indiatimes.com