However, the Trust expects the total collections to be in the region of Rs 500 crore. The MIP scheme offers 9.64 per cent payable annually or 9.25 per cent payable monthly. These rates have been arrived at after taking into account the 22 per cent tax on income distribution.

``The response is very encouraging considering that the investor is aware of the 22 per cent tax incidence this time around.

Besides, we had competition from US-64 and collections in MIP picked up only after the books of US-64 closed on June 15,'' says a UT official.

The Rs 500 crore collection is good news for the stock market, though in a small measure. UTI usually invests 70 per cent in debt and 30 per cent in equities from the MIP account. Assuming that it sets aside 30 per cent for equity, the stock markets can expect an inflow of around Rs 150 crore in the coming weeks. The four-year nine-month close-ended income plan had opened for subscription on May 19, 2000 and closed on June 24, 2000.

The MIP has three options - Monthly Income option, Annual Income option and Cumulative option.

The income distribution is tax-free in the hands of investors. Units offer opportunity for availing capital gains tax exemption under section 54EA of Income Tax Act, 1961 for investment of sale proceeds arising out of transfer of long term capital assets, sold/transferred before 1st April, 2000, provided such investment is made within six months of such sale/transfer.

Under the Monthly Income option, the rate of income distribution at 9.25 per cent per annum will be applicable for the next one year up to June 30, 2001. For subsequent financial years (April-March) till March 2005, the rate of income distribution will be announced in advance in March every year. In the case of both the annual income option and the cumulative option, the rate of income distribution for the next one year up to June 2001 has been pegged at 9.65 per cent per annum. The rate of income distribution for the subsequent financial years will be declared every March.

The units of the plan are proposed to be listed on the wholesale debt segment of the NSE within six months of closure of the scheme. In addition, the investors have the option of exiting the plan from July 1, 2003 at NAV based repurchase price.

The units under the plan will be redeemed at NAV or at par value, whichever is higher. In the event the NAV at redemption is less than Rs 10 per unit, the shortfall will be made good from the Development Reserve Fund (DRF) of the Trust, which guarantees the capital protection at maturity.