Grandfathered debt funds taxation to use 20% with Indexation ?

Teh relevant section on gransfathering clause explicitly states that equity mutual funds and bonds can not avail grandfathering , however is silent on debt oriented mutual funds. :- 
https://incometaxindia.gov.in/Documents/Left%20Menu/income-from-capital-gains.htm?utm_source=chatgpt.com

* The Finance (No. 2) Act, 2024 removed the indexation benefit and introduced a uniform tax rate of 12.5% on long-term capital gains. As per the amendment, no indexation benefit is allowed while computing capital gain from long-term capital assets transferred on or after 23-07-2024. However, the Government has introduced a grandfathering provision. This provision allows resident individuals and resident HUFs to still apply indexation on land or building acquired before 23-07-2024 and pay tax at the old rate of 20% if the tax under the new law (i.e., tax calculated at 12.5% without indexation benefit) results in a higher amount.

However, there are some cases where benefit of indexation is not available, which are as under:

Bumping up since this seems to have gotten missed over the weekend.

Good question - this is one of the most frequently misunderstood aspects of the July 2024 Finance Act amendments.

THE RULES FOR DEBT MUTUAL FUNDS:

Pre-April 2023 purchases (Grandfathered units):
- If units were BOUGHT BEFORE April 1, 2023: old rules still apply
- Held 36+ months = Long-term capital asset
- Tax rate: 20% WITH indexation benefit (Section 112 with CII adjustment)
- This applies regardless of WHEN you sell the units

Post-March 2023 purchases:
- If units were BOUGHT ON OR AFTER April 1, 2023: new rules apply
- ALL capital gains added to income and taxed at slab rate
- No LTCG benefit, no indexation - even if held 10 years

The July 2024 amendment (Finance Act 2024):
- Changed equity taxation (12.5% LTCG without indexation)
- Did NOT change debt fund treatment - debt funds post-March 2023 still at slab rate
- Did NOT affect grandfathered pre-April 2023 units

PRACTICAL EXAMPLE:
Bought debt fund SIP from Jan 2020 to Mar 2023 = All these units are grandfathered
Bought additional SIP from Apr 2023 onwards = New rules apply to these units only

DOCUMENTATION:
- Keep SIP statement clearly showing purchase dates
- Redemption proceeds will split into grandfathered (20% + indexation) vs new (slab) portions
- Mutual fund house will issue capital gains statement with breakup

So yes - your grandfathered units (pre April 2023) can still use 20% with indexation. Only the post-March 2023 units get slab rate treatment.