MUMBAI, May 1: The Association of Mutual Funds In India (Amfi) has sought various concessions in this year's budget to ensure greater investor participation in mutual funds. The recommendations, which were submitted to the finance minister earlier this week, have sought more relaxations on the tax front for mutual funds. They have also put forward the need to bring mutual fund units on par with equity shares of companies.The industry wants the exemption of Rs 3,000 under section 80L on income from mutual fund investments to be hiked to Rs 10,000. According to Amfi, dividend received on units should be exempt from income tax, as is the present practice in the case of equity shares.
Sops have also been sought for investments in equity-linked savings schemes (ELSSs). It has been recommended that such schemes should be allowed to go open-ended as this would remove the necessity to launch an ELSS scheme every year.
At the same time the exemption limit from tax on investment in such schemes should be hikedfrom Rs 10,000 to Rs 30,000. In order to promote long-term savings the current limit of gift tax exemption of Rs 30,000 per annum should be raised to Rs 1 lakh per annum.
Amfi has reiterated its demand of allowing provident funds to invest in equity markets through mutual funds, a point highlighted at a recent seminar on fund management. Amfi has also recommended that provident funds be allowed to invest up to 5 per cent of their funds in mutual funds.
According to Amfi, capital gains tax for long-term capital gains for FIIs is 10 per cent while that for the domestic industry is 20 per cent. The industry wants this anomaly to be removed and would the rate to be uniform.Nomination facility, which is currently allowed to investors in the units of Unit Trust of India, should be extended to the units of other mutual funds by government notification.
Meanwhile, the non-tax recommendations consist of taking up with the Reserve Bank the issue of allowing mutual funds to borrow in the call money market.Currently, mutual funds are not given this option. At present, general permission is granted to UTI in the case of NRIs/OCBs/FIIs to invest in schemes of mutual funds. The same is not true for other funds which are allowed to invest on a case-to-case basis. The industry wants this permission to be given to all mutual funds.
At present, advances against units of mutual funds by commercial banks are permitted only in the case of listed units. The industry would like units under open-ended schemes and transferable, but not listed units also to have this facility.
The industry also wants the cheque writing facility to be granted to money market mutual funds as is prevalent in other countries. This facility helps easy withdrawal and deposit of funds by investors.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
