MUMBAI, Dec 16: The Association of Mutual Funds in India (Amfi) has presented a skeletal model for pension schemes to be floated by mutual funds to SEBI. The model has been presented to SEBI in order to have it forwarded to the Central Bureau of Direct Taxes (CTBT).

As of now there are barely two mutual fund pension schemes in the market, one from the Unit Trust of India and the second from Kothari Pioneer Mutual Fund. However, apart from UTI, all other mutual funds have to seek permission on a case-to-case basis if they want to float pension schemes. A central government notification allowing section 88 of the Income-tax Act to be extended to all pension schemes by mutual funds is still awaited. Sources said that the CBDT is keen that SEBI come out with a model scheme so that it can easily clear the offerings without much delay.

While SEBI offers a cooling period of 21 days to offer documents from mutual funds and conveys its observations after that, in the case of pension schemes whose main attraction is the section 88 benefit, by which tax exemption is available for investments up to Rs 60,000, a nod from the CBDT is required. Currently, pension scheme offer documents from Tata Mutual Fund and IDBI Mutual Fund are languishing for want of CBDT clearance.

Amfi chairman AP Kurien said the model that the association has presented outlines the bare details of such schemes covering the investment pattern for the scheme, the pension disbursal options, the option of charging a variable load depending upon the time of early exit, etc. The model has been designed after taking suggestions from several mutuals. Most mutuals prefer that the schemes not be tied down to any particular investment pattern but rather there be some flexibility depending on the need of the hour. Kurien said that Amfi has forwarded the model to SEBI so that the regulator can take up the matter with CBDT, as a pro-active step for the benefit of the mutual fund industry.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.